Currency notes and coins are essential components of a nation’s economic system, acting as the primary medium of exchange. In India, the Reserve Bank of India (RBI) and the Central Government collaborate in designing, issuing, and managing these critical monetary assets. This article will delve into detail about the respective roles of these key institutions in currency issuance, focusing on the processes involved in currency design and printing.
Role of RBI in Issuing Notes
The Reserve Bank of India, the country’s central banking institution, has exclusive authority to issue banknotes within the country. This power is granted under Section 22 of The Reserve Bank of India Act, 1934. The initiation for changing the design of a currency note comes from within the RBI.
A specialized department within the RBI known as the Department of Currency Management oversees this process. Currently, the Deputy Governor is at its helm. This department is responsible for developing the design and submitting it to the RBI’s Central Board for approval, who, in turn, recommends it to the central government. It is the government that gives the final approval.
Role of Central Government in Minting Coins
While the RBI holds the power to issue notes, the Central Government is vested with the authority to design and mint coins as per The Coinage Act, 2011. The RBI’s role in coin issuance is limited to their distribution. Coins are minted based on the estimated quantity received from the RBI annually and are produced in four mints located in Mumbai, Hyderabad, Kolkata, and Noida.
RBI’s Currency Management System
The RBI operates a well-oiled Currency Management System. After consultation with the central government and other stakeholders, the RBI estimates the demand for different denominations of banknotes for the year and places indents with various printing presses. Two of these, Nasik and Dewas, are government-owned, while the others, Mysore and Salboni, are owned by the RBI’s subsidiary, Bharatiya Reserve Bank Note Mudran Ltd (BRBNML).
Types of Notes Issued So Far
Throughout India’s independence, a variety of banknotes have been issued, each with unique designs and features. The first banknote was the Re 1 note, introduced in 1949, featuring the Ashoka Pillar. Following this were the Mahatma Gandhi Series in 1996 and 2005, with significant design changes including the portrait of Mahatma Gandhi on the obverse side and additional security features. The latest series, Mahatma Gandhi (New) Series, was launched in 2016.
Appointments and Powers in the RBI
The Governor of the Reserve Bank of India is appointed by the Central Government as specified in the Constitution of India. Certain provisions empower the Central Government to issue directives to the RBI in public interest. The power vested in the Governor of the RBI is drawn from the RBI Act.
