Paper currency: Past to Present

Saravanan.S

Professor

Sankara Institute of Management Science

The popularity of India as nation has gained significant popularity in recent times. This popularity is due to the bold decision of central government to make high denomination Rs 500 & Rs 1000 not valid medium of exchange. High denomination currency has always been the subject of debate in function of economy. To understand the currency we have to travel back in time to explore the evolution of currency.

In ancient times the mode of exchange was the coin minted in silver or gold. The first Indian coins were minted in 6th century BC by Mahajanpadas. These coins do not have fixed shape which was made up of silver with several symbols. This practice created a monetary system in the kingdoms of India.

Pre independent India currency

During the British rule in India, the Paper Currency Act of 1861 gave British the monopoly to issue notes in India. The 1867 Victoria portraits series were issued in the country for effective control of illegal currency. The series of first British Indian notes were of Rs.10, Rs.20, Rs.50, Rs.100 and Rs.1000. In 1903 additional currency were issued with Rs.5 as the lowest denomination. Due to the World War 1 paper currency of Rs 1 was introduced in 1917. In 1923 the King portrait series was started with Rs.5, Rs.10, Rs.50, Rs.100, Rs.500, Rs.1000 and Rs10,000.

In 1935, Reserve bank of India was setup to manage the currency system. In 1938 RBI issued first Rs.5 note with additional denomination of Rs.10, Rs.100, Rs.1000 and Rs 10,000 were issued. In 1940 Rs.1 was reintroduced followed by Rs.2.

Independent India currency

In 1953 Hindi was displayed in the new notes and name Rupiaya was changed to rupee. In 1954 Rs.1000, Rs.5000, & Rs 10,000 were reintroduced. In 1957 the rupee was decimalized and divided into 100 paisa. Due to shortage of paper in 1960’s the size of the notes were reduced. In 1980 the success of Aryabhatta, RBI issued new notes citing the advancement in science and technology in Rs.1, Rs.2, Rs.5, Rs.10 & Rs.20.

In 1996 the new Mahatma Gandhi series notes were issued from Rs.10 to Rs.500. It replaced all the notes in circulation. The new notes had changed watermark, security thread, latent image and intaglio feature for the visually handicapped. In 2010 RBI adopted as the official symbol for the Indian rupee.

Demonetized Indian currency

Due to increase in corruption and black money of high value currency and the suffering of economy, the government decided to demonetize the currency in 1978. Higher than Rs 100 were taken out of circulation and major haul in banking system were undertaken. Due to the shortage of currency note the RBI issued the Rs.500 in the year 1987 and Rs.1000 in the year 2000 for smooth flow of transactions. In 2016 the government of India again opted for demonetization of the high value currency to curb the high level of fake currency, corruption & black money. Future of the currency system will determine the growth and strength of the economy.