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Sunday, April 17, 2016

One rupee note - Coin or Currency?


Some curious facts have emerged on One rupee Paper Currency issued by the Govt of India. Money in the form of Currency or Coin for issue and circulation is wholly managed by the Reserve Bank of India. Though the metallic Coins are minted by the Govt, the Currencies are printed by the Reserve Bank of India and both are issued and circulated by RBI on behalf of the Govt. The Indian currency is called the Indian Rupee () and the coins are called Paise. The Indian Currencies are however called Bank Notes as they are issued by the Reserve Bank of India on behalf of the Govt.

Only Reserve Bank of India is authorised to issue Bank Notes in values from rupees two denomination to rupees thousand deno. The RBI is also authorised to issue Bank Notes in denominational value of rupees 10000. The Paper Currencies issued by RBI in the name of Bank Notes carry the title ‘The Reserve Bank of India’ to establish that it has been issued by RBI and the Bank Notes carry the signature of the Governor of RBI. Section 22 of the RBI Act 1934 provides sole right to RBI to issue Bank notes of all denominations. The rule says that ‘every banknote issued by Reserve Bank of India ( 2, 5, 10, 20, 50, 100, 500 and 1000) shall be legal tender at any place in India for payment or on account for the amount expressed therein, and shall be guaranteed by the Central Government, subject to provisions of sub-section (2) Section 26 of RBI Act, 1934’.

The RBI is not authorised to issue metallic Coins in any denominations. Tin respect of issue of Coins, the role of RBI is limited to distribution of Coins that are supplied by Government of India. The responsibility for coinage vests with the Government of India on the basis of the Coinage Act, 2011, as amended from time to time. The prerogative of issuing metallic Coins as Money rests with only the Govt of India.

The metallic Coins in deno of 50 paise to rupees ten including the sub divisions can be issued by the Government of India, including One rupee as Paper Currency since it is listed under Coins. The only Paper Currency in the value of rupee One issued carry the title ‘The Government of India’ to establish that the One rupee Paper Currency has been issued by the Government as Coin. The note carries the signature of the Finance Secretary of Ministry of Finance.

Coins up to 50 paisa are called small coins and coins of Rupee one and above are called Rupee coins. The sub division Coins (Small Coins) in Paise have since been withdrawn and are not circulated. The rule states that the ‘Coins issued under the authority of Section 6 of The Coinage Act, 2011, shall be legal tender in payment or on account i.e. provided that a Coin has not been defaced and has not lost weight so as to be less than such weight as may be prescribed in its case: - (a) coin of any denomination not lower than one rupee shall be legal tender for any sum, (b) half rupee coin shall be legal tender for any sum not exceeding ten rupees’.

 Thus there has been clear division in Money Act on the authority to print or mint Paper Currencies and Metallic Coins and the quantum of Money for certain value to be put to circulation in each budget year is decided in mutual consultation by the Govt and RBI. Though the same has been in vague ever since the Government of India took over the rule from Britishers, the Bank Note printers and collectors will be surprised to find that the gazette notification or any other legal document that provide clear guidelines in respect of the titles to be printed on One rupee note and other Bank Notes in various denominations is curiously not available as revealed in an RTI query found with NDTV –Profit as published dated 12th January 2016. Read the report given below:

Quote:
........Activist Manoranjan Roy had filed an RTI query with the RBI recently seeking gazette copy or any other legal document with respect to the two different titles printed on Re 1 note and other notes.

In its reply, RBI's Central Public Information Officer Uma Shankar said, ‘The information sought is not available with us.’

Notes of Re 1 bear the signature of Secretary, Ministry of Finance, while currency notes of all denominations carry signature of the Governor of RBI.

Roy said that the discrepancy in the title is ambiguous and, moreover, it seems like the RBI was doing its job ‘without clear-cut guidelines’.

The activist also said the RBI Governor's signature on the currency notes, which are in both Hindi and English, should only be in one language. ‘These are definitely not part of security features on a currency note but definitely create unnecessary ambiguity. It is time that the Finance Ministry take a note of it.’
Unquote

Another interesting point needs to be seen on the issue of One rupee note. The mute question is whether Govt of India is legally empowered to issue Paper Currency of rupee One denomination where as only RBI is the sole authority to issue the Paper Currencies in India. As per the Coinage Act the Govt can issue only metallic Coins in various denominations and sub divisions. This issue was again taken up by some activists and matter referred to the Ministry of Law for their opinion.

The opinion given by the Law Ministry has been published by The Hindu National Daily. Read the following as published on September 07, 2014 issue. Only the relevant paras have been given under .

Quote:
............Putting to rest the debate on printing of one rupee notes, the Law Ministry has opined that the Government of India has all the powers to print currency notes of this denomination ( meaning one rupee note- author)

................. since the RBI was of the view that with the repeal of Section 2 of the Currency Ordinance, the Government of India is not empowered to issue note of denominational value of one rupee, the law ministry opinion was taken.

..............The Law Ministry in its opinion stated that the Coinage Act of 2011, which consolidates the laws relating to coinage and the mints, does not bar the Government of India from printing one rupee notes.

...............Section 4 of the Act provides that the central government may authorize minting of coin of denomination not higher than Rs. 1,000, it said, adding that the definition of coin in the Act makes it clear that Government of India one rupee note is included in the definition of coin.

.............The Act defines a coin as “made of any metal or any other material stamped by the Government or any other authority empowered by the Government in this behalf and which is a legal tender including commemorative coin and Government of India one rupee note,” the ministry said in its opinion. 
 
........................“Further, apart from the metal, the coin may be made of any other material,” it said.

....................The ministry said while repealing the Currency Ordinance, 1940, “necessary provisions for inclusion of Government of India one rupee note within the meaning of ‘Coin’ have been consciously incorporated in the Coinage Act, 2011. Further, the RBI, as per Section 24(1) of the RBI Act, 1934, is not empowered to issue bank note of denomination of value of one rupee.”

.................“Central government is not precluded to issue one rupee Government of India note under the Coinage Act, 2011. The dimension, design, material and standard weight of such One Rupee Note have to be prescribed by the Central Government in terms of Section 4 and 5 of the Coinage Act, 2011,” the opinion said.
Unquote

How much One rupee notes have been printed and issued by the Government of India? The RTI query as published by NDTV- Profit dated January 06, 2016 sates the following.

Quote:
The Finance Ministry issued as many as 160 million currency notes of one rupee denomination in the last two years, nearly two decades after they were taken off print, response to queries made under the RTI Act showed.

Delhi-based RTI activist Subhash Chandra Agrawal and Mumbai-based RTI activist Manoranjay Roy had in separate RTI queries sought the number of one rupee currency notes issued by the government in the last 20 years.

‘In 1994-95, total 40 million currency notes of one rupee denomination were issued. Thereafter, there was no issuance of one rupee notes from fiscal year 1995-96 till fiscal year 2013-14,’said the reply furnished by Deputy Manager (HR) and Public Information Officer of Currency Note Press G Krishna Mohan.

However, in the fiscal year 2014-15, a total of five million notes and in the current fiscal year, a total of 155 million notes of one rupee denomination were again introduced in the market, the reply said.

It further said that in fiscal year 1994-95, the production cost of 40 million currency notes of one rupee denomination was Rs 59,40,059, implying that the production cost stood at Rs 1.48 per note.
Unquote


2 comments:

  1. One rupee note-coin or currency, gave a very valuable insight about the one rupee deno. It is however interesting to note that ₹1 costs ₹1.48 to produce. But then the loss perhaps is compensated in the production of high value notes. None the less, the article is very good. Thanks sir

    ReplyDelete
    Replies
    1. It is a big debate 'cost of note production' which even I am unable to understand even though I am also from the same organization. Certain views can not be explained......

      Delete