New Delhi, Nov 18: The word on everyone's lips is demonetisation. It has been more than a week since the decision was announced but people are still struggling to come to terms with it.
This is however not the first time that such a decision has been taken. Let us take a look at some interesting aspects with regard to this issue.
- The process of issuing paper currency started in late eighteen century. In those days, private banks such as - the Bank of Bengal, the Bank of Bombay, and the Bank of Madras used to print paper currency.
- It was only after the Paper Currency Act of 1861 that the government of India was given the monopoly to print currency.
- Before Reserve Bank of India which came into existence in 1935, Government of India used to print currency.
- One may not have an idea but at one point of time RBI used to print banknotes of Rs 10,000 , Rs 5,000 denominations too.
- In January 1938, RBI issued first Rs 5 note paper currency bearing King George VI's portrait on it. Currency notes of Rs 10; Rs 100; Rs 1,000; and Rs 10,000 were also issued in the same year.
- According to RBI, Rs 1,000 and Rs 10,000 notes were demonetised to curb unaccounted money in year 1946.
- These notes were then reintroduced in 1954 (this time Rs 5,000 note was also printed), only to be withdrawn in 1978 again.
- At present, notes of Rs 10; Rs 100; Rs 500; and Rs 1,000 are only printed by the RBI.
- The printing of Re 1, Rs 2 and Rs 5 has been stopped now and in place of these notes, coins were released.
- Government of India continued to issue Rupee one notes till 1994.
How currency is printed
RBI's currency management department regulates whole process of printing money.
The RBI has the powers to print currency notes of up to Rs 10,000 denomination. But, an amendment to the Reserve Bank of India Act, 1934 will be needed if any note of higher denomination has to be printed.
RBI gets new notes from printing presses, the Security Printing and Minting Corporation of India (SPMCIL) and Bharatiya Reserve Bank Note Mudran (BRBNML).
SPMCIL has two printing presses at Nashik in Maharashtra and Dewas in Madhya Pradesh while BRBNML has printing press at Mysuru, Karnataka, and Salboni in Bengal.
Coins are made at four government-owned mints which are loacated at Mumbai, Hyderabad, Kolkata and Noida.
One may not know that the currency paper is composed of cotton and cotton rag.
First the printing press hands over new notes to the RBI office which then provides notes to currency chests. Chests then transfer new notes to various bank branches from ehere people get new notes.
Currency chests are select branches of scheduled banks, which are authorised by the RBI to facilitate distribution of notes and coins.
It depends on notes, varies from note to note. According to a Business standard report, cost of Rs 1,000 note at BRBNML is Rs 2.67 ; in SPMCIL, Rs 3.15. The cost of printing Rs 100 notes in these is Rs 1.20 and Rs 1.41 apiece, respectively.
Report says that it is cost-effective to print a Rs 1,000 note at Rs 3.15, instead of printing ten Rs 100 notes and incurring Rs 14.1 for the same value.
According to RBI's annual report, at the end of March, there were 6.3 billion of Rs 1,000 notes, and 15.7 bn of Rs 500 notes in circulation.
According to an estimate, Rs 10,000 crore would be cost of replacing the entire stock of Rs 1,000 and Rs 500 notes with Rs 100 ones.