Information on Indian National Rupee

"We invented money and we use it, yet we cannot understand its laws or control its actions. It has a life of its own."               
                                                         - Lionel Trilling, American literary critic.

I am telling about the currency. Historians says that the first coin was issued by India and first paper note was issued by China.

Introduction to Indian Rupee

The Indian currency is called the Indian Rupee (INR), and the coins are called the paisa. One Indian Rupee is made up of 100 paisa. Paper money comes in allotments of Rs.1, Rs.5, Rs.10, Rs.20, Rs.50, Rs.100, Rs.500 and Rs.1000. Coins come in allotments of 5 paisa, 10 paisa, 20 paisa, 25 paisa, 50 paisa, one rupee, two rupees and five rupees and also in ten rupees.

The word rupiya or rupee is derived from a Sanskrit word ‘rupa’, which means "wrought silver or a coin of silver" in origin an adjective meaning "shapely", with a more specific meaning of "stamped, impressed", whence "coin". It is derived from the noun rupa "shape, likeness, image". The word rupa is being further identified as having sprung from the Dravidian.

Arthashastra which was written by Chanakya, the prime minister of the first Maurya emperor Chandragupta Maurya (approx. 340-290 BCE), mentions silver coins as rupyarupa, also the other types including gold coins (Suvarnarupa), copper coins (Tamararupa) and lead coins (Sisarupa) are mentioned.

History of Indian Rupee

India was one of the first issuers of coins (approx.: 6th Century BC), and as a result it has seen a wide range of monetary units throughout its history. There is some historical evidence to show that the first coins may have been introduced somewhere between 2500 and 1750 BC. However, the first documented coins date from between the 7th/6th century BC to the 1st century AD. These coins are called 'punch-marked' coins because of their manufacturing technique.

In 712 AD, the Arabs conquered the Indian province of Sindh and brought their influence and coverage with them. By the 12th Century, Turkish Sultans of Delhi replaced the longstanding Arab designs and replaced them with Islamic calligraphy. This currency was referred to as 'Tanka' and the lower valued coins, 'Jittals'. The Delhi Sultanate attempted to standardise this monetary system and coins were subsequently made in gold, silver and copper.

In 1526, the Mughal period commenced, bringing forth a unified and consolidated monetary system for the entire Empire. This was heavily influenced by the Afghan Sher Shah Suri during his five year rule from 1540 to 1545, setup a new civic and military administration who introduced the silver Rupayya or Rupee coin weighting 178 grains. The silver coin remained in use during the Mughal period, Maratha era as well as in British India. The princely states of pre-colonial India minted their own coins, all which mainly resembled the silver Rupee, but held regional distinctions depending on where they were from. During the late 18th Century when political unrest occurred, agency houses developed banks such as the Bank of Bengal and Bihar (1773-75), The Bank of Hindustan (1770-1832), and The Bank of Western India. These banks also printed their own paper currency in the Urdu, Bengali and Nagri languages.

The Indian rupee was a silver-based currency during much of the 19th century, which had severe consequences on the standard value of the currency, as stronger economies were on the gold standard. During British rule, and the first decade of independence, the rupee was subdivided into 16 annas. Each anna was subdivided into either 4 paisa or 12 pies. So one rupee was equal to 16 annas, 64 paisa of 192 pies. In 1957, decimalisation occurred and the rupee was divided into 100 naye paise (Hindi/Urdu for new paisa). After a few years, the initial "naye" was dropped.

It was only in 1858 when the British Crown gained control of the one hundred Princely states, and subsequently ended the Mughal Empire, that the coin's native images were replaced by portraits of the Queen of Great Britain to indicate British Authority. In 1866, when the financial establishments collapsed, the control of paper money also shifted to the British Government. This was subsequently passed to the Pristine Masters, the Accountant Generals and the Controller of Currency. In 1867, the Victoria Portrait series of bank notes was issued in honour of Queen Victoria.

After gaining independence in 1947 and becoming a republic in 1950, India's modern Rupee reverted back to the design of the signature Rupee coin. The symbol chosen for the paper currency was the Lion Capital at Sarnath which replaced the George VI series of bank notes. In 1996, the Mahatma Gandhi Series of Paper notes was introduced.

The First Bank of India

The first banks were Bank of Hindustan and The General Bank of India. The largest bank, and the oldest that still in existence, is the State Bank of India, which originated in the Bank of Calcutta in June 1806, which almost immediately became the Bank of Bengal. This was one of the three presidency banks, the other two being the Bank of Bombay and the Bank of Madras, all three of which were established under charters from the British East India Company. The three banks merged in 1921 to form the Imperial Bank of India, which, upon India's independence, became the State Bank of India in 1955.

The Reserve Bank of India was formally inaugurated on Monday, April 1, 1935 with its Central Office at Calcutta. Section 22 of the RBI Act, 1934, authorized it to continue issuing Government of India notes until its own notes were ready for issue. The bank issued the first five rupee note bearing the portrait of George VI in 1938. This was followed by Rs. 10 in February, Rs 100 in March and Rs 1,000 and Rs 10,000 in June 1938. The first Reserve Bank issues were signed by the second Governor, Sir James Taylor. In August 1940, the one-rupee note was reintroduced as a wartime measure, as a Government note with the status of a rupee coin. During the war, the Japanese produced high-quality forgeries of the Indian currency. This necessitated a change in the watermark. The profile portrait of George VI was changed to his full frontal portrait. The security thread was introduced for the first time in India. The George VI series continued till 1947 and thereafter as a frozen series till 1950 when post-independence notes were issued.

Reserve Bank of India

The functions of Reserve Bank are governed by central board of directors. The board is appointed by the Government of India. The directors are nominated / appointed for a period of four years. As per the Reserve Bank of India Act there are Official Directors and Non-Official Directors. The Official Directors are appointed by the government and include Governor and Deputy Governors of RBI. There cannot be more than four Deputy Governors. Non-Official Directors are nominated by the government. These include ten Directors from various fields and one government official. Apart from these, there are four other Non-Official Directors, one each from four local boards in Mumbai, Kolkata, Chennai and New Delhi.