An overview of the evolution of paper currency in India

Governments have, for centuries spent a large amount of time and resources in the production of currency in a way that can best serve as the representation of regional and later national pride and interests.

Written by Adrija Roychowdhury | New Delhi | Updated: November 16, 2016 4:51 pm
demonetisation, withdrawal of five hundred and one thousand rupees notes, Narendra Modi, 500 and 1000 rupees, 500 rs, 1000 rs, new 2000 rs, new 500 rs, Indian currency, Indian currency crisis, currency crisis in India, history of Indian currency, British empire, Indian rupee, history of Indian rupee, new two thousand rupees note, new five hundred rupees note, Indian Express The Rupee 1 note was issued in 1949 which carried the emblem of the Lion Capital in Sarnath. (RBI monetary museum)

Prime Minister Narendra Modi’s announcement on November 8 to withdraw currency notes of denomination 500 and 1000 and the issue of new notes worth Rs 2000 and Rs 500 clearly left the country in a shock from which it will take a while to recover. While analysts have poured in both criticism and admiration for the government’s move, both sides do agree on the historic nature of the announcement. However, currency reforms like these are not exactly new. Since the Republic of India took birth and even before, paper currency in the subcontinent had been periodically transformed to reflect the needs of the time.

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Paper currency in India came into existence with the entry of European entrepreneurs and particularly so with the establishment of financial institutions like the General Bank of Bengal and Bihar, the Bank of Hindoostan and the Bank of Bengal. Before paper currency, coinage was the normal form of currency and their nature differed from region to region within India.

Be it coinage or paper, the nature and form of the currency is a lot more than just a commodity used in exchange of goods and services. While purchasing power is definitely the foremost role played by currencies, governments have, for centuries spent a large amount of time and resources in the production of currency in a way that can best serve as the representation of regional and later national pride and interests. Historians in fact use currency as an important source for the understanding of historical processes.

British India

Before independence, the British government issued currency notes for India. The princely states continued using individual currencies of their own, majority of which were coins. While initially the presidency banks were entrusted with the responsibility of producing paper currency across the British Indian domains, the duty was later transferred to the Mint masters, the Accountant Generals and the Controller of Currency.

The first set of notes issued by the British government were the Victoria portrait series of denominations 10, 20, 50, 100 and 1000.

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In response to several cases of forgeries, the Victoria series were withdrawn in 1867 and in its place were issued currencies on moulded paper with language panels carrying languages of the regions in which they were circulated. These were called the underprint series.

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The exigencies of the First World War made it necessary to issue new notes of smaller denominations. These notes were further replaced in 1923 with new notes carrying the portrait of King George V. The King’s portrait continued to be used on all notes issued by the British government in India till the country’s Independence.

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The Republic of India

The birth of the Republic of India made it necessary for the newly formed government to issue currencies that can wipe out the hitherto superiority of the British empire and imprint upon monetary matters the mark of Indian freedom. Therefore the portrait of King George V was removed and symbols of independent India were printed on the new notes.

The Rupee 1 note was issued in 1949 which carried the emblem of the Lion Capital in Sarnath.

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New notes were introduced in 1953 which carried texts in Hindi and had images of iconic architectural pieces in India like the Tanjore temple and the Gateway of India.

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Economic constraints of the 1960s led to the issue of smaller notes. From now and later again in the early 1970s, the portrait of Mahatma Gandhi was printed on the new notes.

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A new Mahatma Gandhi series notes were introduced once again in 1996 with newer security features. Gandhi continues to be printed on all notes of the Indian currency including the most recent introduction of Rs 2000 and Rs 500.

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The last time old currencies were withdrawn in India was in 1978 when notes of Rs 1,000, Rs 5,000 and Rs 10,000 were removed and before that in 1946 when the British government withdrew higher denomination notes in the aftermath of the Second World War.

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First Published on: November 16, 2016 4:44 pm
  1. P
    pllv
    Feb 28, 2017 at 3:11 pm
    nice....
    Reply
    1. B
      Bryan Alex
      Dec 12, 2016 at 8:52 am
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      1. B
        BALU
        Nov 19, 2016 at 9:39 am
        today is 19 11 2016, still, new five hundred denomination of INR has not available in banks!! i am a small middle working cl family. there r millions-crores of people of my category. just imagine our sufferings/difficulties ...... 100 rupees notes r not available. rs. 2000 denomination notes r available, what's the use, no shopkeepers r accepting? what people like me would buy with Rs.2,000 notes? queues in banks r unending. whether i wld go to my bread and butter or stand in long queues ? without proper exercise, the govt. of the order come with such demonetization, truly, it 'stabbed' back of small people of this country. what about daily wage earning members? even today also in mumbai, queues r lengthy .... crowd ... the govt. of the order must bring immediately new rupees five hundred denomination in full circular and available in all banks. rs. 2000 is in circular but for no use when no shopkeeper / vendor accepting. rs. 100 and rs. 50 denomination notes be launched and circulate through bank so that people of this country already suffering will get a sigh of relief, otherwise, situation would turn from bad to worse. although the demonetization is good for the health of this great Nation, however, unavailbility of Rs.100, Rs. 50 and Rs. 500 notes would make the situation most worst. it is high time, the govt. must take immediate steps to curb the situation. richmen, politicians, bureaucrats r not at all affected, poor people r struggling for their day-to-day-routines, this aspect should be taken on the top of the priority and the govt. must ensure that the needful is done. thank you,
        Reply
        1. இன்னம்பூரான்
          Nov 16, 2016 at 2:12 pm
          In the long term, the GOI can, by adroit limits to circulation of of different value currency notes - Rs/1 to Rs. 10,000/-, can keep a vigilant eye all the time on black money. Incidentally, except the Sl no 2,3,and4, I have handled all the currency notes. We were top poor to save a few each as collector -keeps.
          Reply
          1. S
            S Subramaniam
            Nov 16, 2016 at 11:56 am
            Since majority of 125-30 Crores of India's potion are poor it is suggested that that the only5% of high-end notes may be printed.
            Reply
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