Monetary System in India

The monetary history of India consists of different monetary standards. The present monetary system of India is known as Inconvertible Paper Currency Standard and is controlled and managed by the Reserve Bank of India. Rupee(₹) has been regarded as the standard currency of India and every transaction here takes place in terms of Rupees. 

Important facts about the Monetary System in India

1. The monetary authority of India is the Reserve Bank of India (RBI).

2. As the currency used in India is made of paper, it follows Paper Currency Standard. 

3. The limited legal tender money in India is Coins. The coins can be used to make small payments. However, the unlimited legal tender money in India is Paper Notes. The paper notes can be used to make payments of any amount. 

4. The Reserve Bank of India has the sole monopoly in issuing currency notes of ₹2 and above. However, the Ministry of Finance issues all coins and the one rupee note. 

5. The Reserve Bank of India is responsible for putting the currency notes and coins into circulation. 

6. To issue notes, India follows Minimum Reserve System. According to this system, the Reserve Bank of India (Central Bank) has to keep a minimum reserve of gold and foreign exchange worth ₹200 crores. Based on this reserve, the Reserve Bank of India can issue any number of notes in the country.