Indian Rupee

The Indian rupee, रुपया,  ₹;code: INR is the official currency of the Republic of India. The issuance of the currency is controlled by the Reserve Bank of India.

The modern rupee is subdivided into 100 paise (singular paisa). The coins have nominal values of 1, 2, 5, 10, 20, 25 and 50 paise as well as 1, 2, 5 and 10 rupees. The bank notes are available in nominal values of 1, 2, 5, 10, 20, 50, 100, 500 and 1000 rupees. The Indian rupee symbol (₹) is derived from the Devanagari consonant "र" (Ra) with an added horizontal bar.

Etymology

The word Rupee is derived from the Sanskrit word रौप्य (raupya) meaning "silver" or "made of silver". Many Indian languages use this root, for example, రూపాయి (rūpāyi) in Telugu, ரூபாய் (rūbāi) in Tamil, रुपया (rupayā) in Hindi, રૂપિયો (rupiyo) in Gujarati, ರೂಪಾಯಿ (rūpāyi) in Kannada and Tulu, രൂപ (rūpā) in Malayalam and रुपये (rupaye) in Marathi. However, in West Bengal, Tripura, Mizoram, Orissa, and Assam, the Indian rupee is officially known by names derived from the word टङ्क (Tanka) which means money. Thus, the rupee is called টাকা (Taka) in Bengali, টকা (tôka) in Assamese, and ଟଙ୍କା (Tanka) in Oriya. The amount and the word "rupee" is accordingly written on Indian banknotes in several Indian languages.

Symbol

On March 5, 2009 the Indian government announced a contest to create a symbol for the rupee.During the year 2010's Union Budget, Finance Minister Pranab Mukherjee mentioned that the proposed symbol would reflect and capture the Indian ethos and culture. Five symbols were shortlisted, and the Cabinet selected the definitive symbol created by D Udaya Kumar on July 15, 2010. The symbol is derived from the Devanagari letter ‘र’ with an additional horizontal line. The parallel lines at the top (with white space between them) make an allusion to the tricolor and also depict an equality sign which symbolizes the nation's desire to reduce economic disparity.The Indian government will try to adopt the symbol within six months in the country and globally within 18 to 24 months.Before the adoption of the symbol, the most commonly used symbols for the rupee were Rs, Re or if the text was in an Indian language, then an appropriate abbreviation in that language. The official rupee sign is included in Unicode from version 6.0, which was released on October 11, 2010.

Numeral system

In Indian English, values greater than or equal to hundred thousand Indian rupees are counted in terms of lakhs (one lakh = hundred thousand), and crores (one crore = ten million). For example, the amount 3,25,84,729.25 is read as three crores, twenty-five lakhs, eighty-four thousand, seven hundred and twenty-nine rupees and twenty-five paise. The use of million or billion, as is standard in American or British English, is not very common.

History

India was one of the earliest issuers of coins (circa 6th century BC). The first "rupee" is believed to have been introduced by Sher Shah Suri (1486–1545), based on a ratio of 40 copper pieces (paisa) per rupee. Among the earliest issues of paper rupees were those by the Bank of Hindustan (1770–1832), the General Bank of Bengal and Bihar (1773–75, established by Warren Hastings) and the Bengal Bank (1784–91), amongst others. Until 1815, the Madras Presidency also issued a currency based on the fanam, with 12 fanams equal to the rupee.

Historically, the rupee, derived from the Sanskrit word raupya, which means silver, was a silver coin. This had severe consequences in the nineteenth century, when the strongest economies in the world were on the gold standard. The discovery of vast quantities of silver in the U.S. and various European colonies resulted in a decline in the relative value of silver to gold. Suddenly the standard currency of India could not buy as much from the outside world. This event was known as "the fall of the rupee".

India was not affected by the imperial order-in-council of 1825 that attempted to introduce the British sterling coinage to the British colonies. British India at that time was controlled by the British East India Company. The silver rupee continued as the currency of India throughout the entire period of the British Raj and beyond. In 1835, British India set itself firmly upon a mono-metallic silver standard based on the rupee. His decision was influenced by a letter, written in the year 1805, by Lord Liverpool that extolled the virtues of mono-metallism.

Following the Indian Mutiny in 1857, the British government took direct control of British India. Since 1851, gold sovereigns were being produced in large numbers at the Royal Mint branch in Sydney, New South Wales. In the year 1864 in an attempt to make the British gold sovereign become the 'imperial coin', the treasuries in Bombay and Calcutta were instructed to receive gold sovereigns. These gold sovereigns however never left the vaults. As was realized in the previous decade in Canada and the next year in Hong Kong, existing habits are hard to replace. Just as the British government had finally given up any hopes of replacing the rupee in India with the pound sterling, it simultaneously realized, and for the same reasons, that they could not easily replace the silver dollar in the Straits Settlements with the Indian rupee, as had been the desire of the British East India Company.

Since the great silver crisis of 1873, a growing number of nations had been adopting the gold standard. In 1898, following the recommendations of the Indian Currency Committee, British India officially adopted the gold exchange standard by pegging the rupee to the British pound sterling at a fixed value of 1 shilling 4 pence (i.e., 15 rupees = 1 pound). In 1920, the actual silver value of the rupee was increased in value to 2 shillings (10 rupees = 1 pound). In British East Africa at this time, the decision was made to replace the rupee with a florin. No such opportunity was, however, taken in British India.

In 1927, the peg was once more reduced, this time to 18 pence (13⅓ rupees = 1 pound). This peg was maintained until 1966, when the rupee was devalued and pegged to the U.S. dollar at a rate of 7.5 rupees = 1 dollar (at the time, the rupee became equal to 11.4 British pence). This peg lasted until the U.S. dollar devalued in 1971.

The Indian rupee replaced the Danish Indian rupee in 1845, the French Indian rupee in 1954 and the Portuguese Indian escudo in 1961. Following independence in 1947, the Indian rupee replaced all the currencies of the previously autonomous states. Some of these states had issued rupees equal to those issued by the British (such as the Travancore rupee). Other currencies included the Hyderabad rupee and the Kutch kori. Nominal value during British rule, and the first decade of independence:

1 damidi(pie) = 0.520833 paise

1 kani(pice) = 1.5625 paise

1 paraka = 3.125 paise

1 anna = 6.25 paise (1 Anna)

1 beda = 12.5 paise (2 Anna)

1 pavala = 25 paise (4 Anna)

1 artharupee = 50 paise (8 Anna)

1 rupee = 100 paise (16 Anna)

In 1957, decimalisation occurred and the rupee was divided into 100 naye paise (Hindi for "new paise"). In 1964, the initial "naye" was dropped. Many still refer to 25, 50 and 75 paise as 4, 8 and 12 annas respectively, not unlike the usage of "bit" in American English for ⅛ dollar.

In East Africa, Arabia, and Mesopotamia the Rupee and its subsidiary coinage was current at various times. The usage of the Rupee in East Africa extended from Somalia in the north, to as far south as Natal. In Mozambique the British India rupees were overstamped, and in Kenya the British East Africa Company minted the rupee and its fractions as well as pice. The rise in the price of silver immediately after the First World War caused the rupee to rise in value to two shillings sterling. In 1920 in British East Africa, the opportunity was then taken to introduce a new florin coin, hence bringing the currency into line with sterling. Shortly after that, the Florin was split into two East African shillings. This assimilation to sterling did not however happen in British India itself. In Somalia the Italian colonial authority minted 'rupia' to exactly the same standard, and called the pice 'besa'.

The rupee in the Straits Settlements

The Straits Settlements were originally an outlier of the British East India Company. The Spanish dollar had already taken hold in the Straits Settlements by the time the British arrived in the nineteenth century, however, the East India Company tried to introduce the rupee in its place. These attempts were resisted by the locals, and by 1867 when the British government took over direct control of the Straits Settlements from the East India Company, attempts to introduce the rupee were finally abandoned.

International use

With Partition, the Pakistani rupee came into existence, initially using Indian coins and Indian currency notes simply overstamped with "Pakistan". In previous times, the Indian rupee was an official currency of other countries, including Aden, Oman, Kuwait, Bahrain, Qatar, the Trucial States, Kenya, Tanganyika, Uganda, the Seychelles, and Mauritius.

The Indian government introduced the Gulf rupee, also known as the Persian Gulf rupee (XPGR), as a replacement for the Indian rupee for circulation exclusively outside the country with the Reserve Bank of India [Amendment] Act, 1 May 1959. This creation of a separate currency was an attempt to reduce the strain put on India's foreign reserves by gold smuggling. After India devalued the rupee on 6 June 1966, those countries still using it – Oman, Qatar, and the Trucial States (which became the United Arab Emirates in 1971) – replaced the Gulf rupee with their own currencies. Kuwait and Bahrain had already done so in 1961 and 1965 respectively.

The Bhutanese ngultrum is pegged at par with the Indian rupee, and both currencies are accepted in Bhutan. The Indian rupee is also accepted in towns in Nepal which lie near the border with India. However, Indian Rupee denominations of 500 and 1000 are banned in Nepal.

Circulating Coins

Image Value Technical parameters Description Year of

Obverse Reverse Diameter Mass Composition Shape Obverse Reverse first minting last minting

This file is a candidate for speedy deletion. It may be deleted after Thursday, October 14, 2010. || 5 paise || 22 mm (diagonal) || 1.5 g || Aluminium || Diamond with curved edges || Value || Tractor || 1957 || 1994 |

10 paise 16 mm 2 g Ferritic stainless steel Circular Emblem of India Value 1961

20 paise 26 mm 2 g Aluminium Hexagon Emblem of India Value 1982

25 paise 19 mm 2.83 g Ferritic stainless steel Circular Emblem of India, value Rhinoceros 1988

50 paise 22 mm 3.79 g Ferritic stainless steel Circular Emblem of India, value Value, Hand showing clenched fist 1988

1 25 mm 4.85 g Ferritic stainless steel Circular Emblem of India, value Value, Two stalks of wheat 1992

1 25 mm 4.85 g Ferritic stainless steel Circular Emblem of India Value, Hand showing thumb 2007

2 26 mm 6 g Cupro-Nickel Eleven Sided Emblem of India, Value National Integration 1982

2 27 mm 5.62 g Ferritic stainless steel Circular Emblem of India Value, Hand showing 2 fingers 2007

5 23 mm 9 g Cupro-Nickel Circular Emblem of India Value 1992

5 23 mm 6 g Ferritic stainless steel Circular Emblem of India Value, wavy lines 2007

5 23 mm 6 g Brass Circular Emblem of India Value, wavy lines 2009

10 28 mm 8 g Bimetallic Circular Emblem of India with value Value, wavy lines 2009

For table standards, see the coin specification table.

The coins are minted at the four locations of the India Government Mint. Note the 1, 2 & 5 rupee coins have been minted since independence. Coins minted with the "Hand Picture" are 2005 onwards.

Banknotes

British India, 1861–1947

In 1861, the Government of India introduced its first paper money, 10 rupee in 1864, 5 rupees in 1872, 10,000 rupees in 1899, 100 rupees in 1900, 50 rupees in 1905, 500 rupees in 1907 and 1000 rupees in 1909. In 1917, 1 and 2½ rupees notes were introduced. The Reserve Bank of India began note production in 1938, issuing 2, 5, 10, 50, 100, 1000 and 10000 rupee notes, while the Government continued to issue 1 rupee notes.

Independent issues since 1949

After independence, new designs were introduced to remove the portrait of the King. The government continued to issue the 1 rupee note, while the Reserve Bank issued other denominations, including the 5000 and 10,000 rupee notes introduced in 1949. In the 1970s, 20 and 50 rupee notes were introduced but denominations higher than 100 rupees were demonetized in 1978. In 1987, the 500 rupee note was introduced, followed by the 1000 rupees in 2000. 1 Rupee and 2 rupees notes were discontinued in 1995.

In September 2009, the Reserve Bank of India decided to introduce polymer notes (polymer banknote) on a trial basis. Initially, 100 crore (1 billion) pieces of 10 denomination notes will be introduced.According to the Reserve Bank officials, the polymer notes will have an average lifespan of 5 years (4 times the regular Indian bank notes) and will be difficult to counterfeit. They would also be cleaner than the regular notes.

Currently circulating notes

The design of banknotes is approved by the Central Government on the recommendations of the Central Board of the Reserve Bank of India. Currency notes are printed at the Currency Note Press, Nashik, Bank Note Press, Dewas, Bharatiya Note Mudra Nigam (P) Limited presses at Salboni and Mysore and at the Watermark Paper Manufacturing Mill, Hoshangabad.

The current series of banknotes, which began in 1996, is called the Mahatma Gandhi series. At present, banknotes are issued in the denominations of 5, 10, 20, 50, 100, 500 and 1000. Printing of 5 notes which had stopped earlier restarted in 2009. ATMs usually give out 100, 500, and 1000 notes. The Zero rupee note is not an official government issue but a symbol of protest and it is printed and distributed by an NGO in India.

Mahatma Gandhi Series

Image Value

Dimensions Main Color Description Year of issue

Obverse Reverse Obverse Reverse Watermark

5 117 × 63 mm Green Mahatma Gandhi Tractor Mahatma Gandhi 2002 / 2009

10 137 × 63 mm Orange-violet Rhinoceros, elephant, tiger 1996 / 2006

20 147 × 63 mm Red-orange Palm trees, North Bay 2002 / 2006

50 147 × 73 mm Violet Parliament of India 1997 / 2005

100 157 × 73 mm Blue-green at centre, brown-purple at 2 sides Himalaya Mountains 1996 / 2005

500 167 × 73 mm Olive and yellow Dandi March 2000 / 2005

1000 177 × 73 mm Amber-Red Economy of India 2000 / 2005

These images are to scale at 0.7 pixels per millimetre. For table standards, see the banknote specification table.

Language panel on an Indian banknote

Languages

Each banknote has its amount written in 15 languages. On the obverse side, the denomination is written in English and Hindi. On the reverse of each note is a language panel that displays the denomination of the note in 15 of the 22 official languages of India. The languages are displayed in the alphabetical order. The languages included on the panel are Assamese, Bengali, Gujarati, Kannada, Kashmiri, Konkani, Malayalam, Marathi, Nepali, Oriya, Punjabi, Sanskrit, Tamil, Telugu and Urdu.

Security features

The main security features of the current banknotes are listed below:

Watermark - White side panel of notes has Mahatma Gandhi watermark.

Security thread - All notes have a silver security band with inscriptions visible when held against light which reads Bharat in Hindi and RBI in English.

Latent image - On notes with denominations of 20 and upwards, a vertical band on the right side of the Mahatma Gandhi’s portrait contains a latent image showing the respective denominational value in numeral which is visible only when the note is held horizontally at eye level.

Microlettering - Numeral denominational value is visible under magnifying glass between security thread and latent image.

Intaglio - On notes with denominations of 20 and upwards, the portrait of Mahatma Gandhi, the Reserve Bank seal, guarantee and promise clause, Ashoka Pillar Emblem on the left, RBI Governor's signature are printed in intaglio i.e. in raised prints.

Identification Mark - On the left of the watermark window different shapes are printed in Intaglio for various denominations (20 - Vertical Rectangle, 50 - Square, 100 - Triangle, 500 - Circle, 1000 - Diamond). This also helps the visually impaired to identify the denomination.

Fluorescence - Number panels glow under ultra-violet light.

Optically variable ink - Notes of 500 and 1000 have their numerals printed in optically variable ink. Number appears green when note is held flat but changes to blue when viewed at angle.

See through Register - Floral design printed on the front and the back of the note coincides and perfectly overlap each other when viewed against light.

EURion constellation - A pattern of symbols found on the banknote helps software detect the presence of a banknote in a digital image so that it can prevent its reproduction with devices such as color photocopiers.

Convertibility

Officially, the Indian rupee has a market determined exchange rate. However, the RBI trades actively in the USD/INR currency market to impact effective exchange rates. Thus, the currency regime in place for the Indian rupee with respect to the US dollar is a de facto controlled exchange rate. This is sometimes called a managed float. Other rates such as the EUR/INR and INR/JPY have volatilities that are typical of floating exchange rates. It should be noted, however, that unlike China, successive administrations (through RBI, the central bank) have not followed a policy of pegging the INR to a specific foreign currency at a particular exchange rate. RBI intervention in currency markets is solely to deliver low volatility in the exchange rates, and not to take a view on the rate or direction of the Indian rupee in relation to other currencies.

Also affecting convertibility is a series of customs regulations restricting the import and export of rupees. Legally, foreign nationals are forbidden from importing or exporting rupees, while Indian nationals can import and export only up to 5000 rupees at a time, and the possession of 500 and 1000 rupee notes in Nepal is prohibited.

RBI also exercises a system of capital controls in addition to the intervention (through active trading) in the currency markets. On the current account, there are no currency conversion restrictions hindering buying or selling foreign exchange (though trade barriers do exist). On the capital account, foreign institutional investors have convertibility to bring money in and out of the country and buy securities (subject to certain quantitative restrictions). Local firms are able to take capital out of the country in order to expand globally. But local households are restricted in their ability to do global diversification. However, owing to an enormous expansion of the current account and the capital account, India is increasingly moving towards de facto full convertibility.

There is some confusion regarding the interchange of the currency with gold, but the system that India follows is that money cannot be exchanged for gold, in any circumstances or any situation. Money cannot be changed into gold by the RBI. This is because it will become difficult to handle it. India follows the same principle as Great Britain and America.

Chronology

1991 - India began to lift restrictions on its currency. A series of reforms remove restrictions on current account transactions including trade, interest payments & remittances and on some capital assets-based transactions. Liberalized Exchange Rate Management System (LERMS), a dual exchange rate system, introduced a partial convertibility of the Rupee in March 1992.

1997 - A panel set up to explore capital account convertibility recommended India move towards full convertibility by 2000, but timetable abandoned in the wake of the 1997-98 East Asian financial crisis.

2006 - The Prime Minister, Dr Manmohan Singh, asks the Finance Minister and the Reserve Bank of India to prepare a road map for moving towards capital account convertibility. "The "Fuller Capital Account Convertibility Report"". 2006-07-31. Retrieved 2009-01-23.