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Sunday, February 10, 2008

[Keralites] Re: procedure of new currencies

Satheesh,
The Reserve Bank decides upon the volume and value of bank notes to be printed. The quantum of bank notes that needs to be printed broadly depends on the annual increase in bank notes required for circulation purposes, replacement of soiled notes and reserve requirements
The Reserve Bank estimates the demand for bank notes on the basis of the growth rate of the economy, the replacement demand and reserve requirements by using statistical models.
Under Section 22 of the Reserve Bank of India Act, the Bank has the sole right to issue bank notes of all denominations. The distribution of one rupee notes and coins and small coins all over the country is undertaken by the Reserve Bank as agent of the Government. The Reserve Bank has a separate Issue Department which is entrusted with the issue of currency notes. The assets and liabilities of the Issue Department are kept separate from those of the Banking Department. Originally, the assets of the Issue Department were to consist of not less than two-fifths of gold coin, gold bullion or sterling securities provided the amount of gold was not less than Rs. 40 crores in value. The remaining three-fifths of the assets might be held in rupee coins, Government of India rupee securities, eligible bills of exchange and promissory notes payable in India. Due to the exigencies of the Second World War and the post-was period, these provisions were considerably modified. Since 1957, the Reserve Bank of India is required to maintain gold and foreign exchange reserves of Ra. 200 crores, of which at least Rs. 115 crores should be in gold. The system as it exists today is known as the minimum reserve system
 
There is a seperate department functioning for currecny management inRBI,Details are here

The Department addresses policy and operational issues relating to :

  • designing of banknotes,
  • forecasting demand for notes and coins,
  • ensuring smooth distribution of banknotes and coins throughout the country and retrieval of unfit notes and uncurrent coins from circulation,
  • ensuring the integrity of bank notes,
  • administering the RBI (Note Refund) Rules,
  • reviewing/rationalising the work systems/procedures at the issue offices on an ongoing basis and
  • dissemination of information on currency related matters to the general public.

Also see this anual report
Spark
On Feb 10, 2008 7:52 PM, Satheesh Kumar <Satheesh.kumar@installuxgulf.com> wrote:
Dear All
 
Could you please let us know the procedure of printing new currencies in India (not against the old currencies). How they identify this much currencies are required to market etc etc. I don't know my question is clear or not. Let me explain with an example
 
Suppose the country have only 10 persons. And Govt. printed 100 rs note of 10 and gave to each, why next year there will be more currencies, is it because of population growth only, what are the factors RBI considering to print new notes.
 
Hope that moderators will not hold this mail
 

I stay at your disposal if you wish further information


Best Regards,


Satheesh Kumar

satheesh.kumar@installuxgulf.com

http://www.installux.fr/

THINK.ALUMINIUM.

THINK.INSTALLUX.

Installux Gulf

PO Box: 10229

Manama

Kingdom of Bahrain

Tel: +97317590589 Fax: +97317591589


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