Rohit Bansal
When was the last time you saw a cash gift of Rs11, 21, 51, 101, or even 1001? Probably, all the time. But when was the last you saw a crisp and unsoiled Rs1 note to close the auspicious figure? Hmm… Most of us solve the problem with a coin of one rupee. The more modern types have started giving (and accepting!) Rs10, 20, 50, 100 or 1,000.
But the crisp Rs1 note is back! That's after 20 years since it was discontinued in 1994. Disclaimer: My own curiosity in the matter came out of a parochial reason. The Union finance secretary is the legal authority for signing the Rs1 note - and Rajiv Mehrishi being a old Stephanian merited a posting in the alumni facebook page, Laal Sitara.
(For those just tuning in, PTI reported that in Srinathji temple in Nathdwara, Udaipur earlier this week, Mehrishi released new Rs1 notes after offering prayers, "A bundle of new notes of Rs1 denomination was presented at the feet of Srinathji," Sudhakar Shashtri, Krishna Bhandar in-charge told the news agency. Mehrishi also signed on a one-rupee note along with the bundle of 100 notes.)
So, here are four interesting things you may want to know:
1.In technical parlance, the Rs1 note is a coin! You read this correctly - the Coinage Act, 2011 under which Mehrishi draws his powers to issue the Rs1 bank note says that "coin" means "any coin which is made of any metal or any other material stamped by the Government (GOI) or any other authority empowered by the Government in this behalf and which is a legal tender including commemorative coin AND Government of India one rupee note (emphasis mine)."
2. The notification (Finance Ministry, December 16, 2014) announcing the return of the Rs1 banknote relies on the aforementioned definition of coins.**
You may not care so long as you can add (or receive!) that Re1 note, but that's the power (Clauses (d) and (e) of Sub-Section (2) of Section 24 of Coinage Act, 2011, to be specific) where Government (not the Reserve Bank of India, in the case of coins) controls, "dimensions, designs, metals, mixed metals or their composition, for coins (read Rs1 notes too!)" as well as, "the standard weight of coins and the remedy allowed in making such coins.".
3. The return of the Rs1 note isn't an act of Mehrishi's vanity, as some in the RBI believe. Yes, he gets his name, in two languages at that, on a piece of Indian currency. But the larger point is borne out of public interest.
It solves what the RBI website states on discontinuation of the Rs 1 (and Rs2, Rs5) note: "Even though volume-wise, the share of such small denomination banknotes in the total banknotes in circulation was high, in value terms they constituted a very small percentage with average life of less than one year. The cost of printing and servicing these banknotes being not commensurate with their life, printing of these banknotes was discontinued and these denominations were coinised. However, Rs5 bank notes were re-introduced in 2001 to bridge the gap between demand and supply of coins in this denomination. The printing of Rs5 banknotes has been discontinued from the year 2005."
Is the cost of printing a Rs1 note so high that a great nation can't afford to print it, if only to satisfy the felt need of millions on their auspicious occasions!
4. Finally, how does the invocation of Srinathji augur for FinMin's assertion of authority on RBI and the economy? One has to wait and see - but it worth noting that a devotee has signed the bank note being placed at the Lord's Feet!
1) To those wondering why GOI (not RBI) signs the Rs1 note - The Rs1 note is the currency unit of India. It is monetary matter comes under the central list.
All works of central list are done in the name of the Central Government. So, for currency matter finance ministry is the first and immediate authority to fix the value of the first unit of currency. It issues the Re1 note to ensure its control over currency.
Therefore, the finance secretary signs it on the name of the GOI. The rest of the currency is valued as per the value of one rupee.Re1 notes issued under the Currency Ordinance, 1940 are also legal tender and included in the expression Rupee coin for all the purposes of the Reserve Bank of India Act, 1934.
The Rs1 issued by GOI constitute a liability of the government. RBI's role is limited to distribution of coins supplied by GOI.
2) GOI issued currency notes till the RBI in 1935. When the Rs1 note was reintroduced as a war time measure in August, 1940, it was issued by GOI with the status of a coin.
3) RBI can also issue banknotes in the denominations of Rs5,000 and Rs10,000, or any other denomination that the GOI may specify. However, there cannot be banknotes in denominations higher than Rs10,000 in terms of the current provisions of the RBI Act, 1934. Coins can be issued up to the denomination of Rs1,000 in terms of The Coinage Act.
4) Coins in the denomination of 1 paise, 2 paise, 3 paise, 5 paise, 10 paise, 20 paise and 25 paise have been withdrawn from circulation with effect from June 30, 2011 and are, therefore, no more legal tender.
(The columnist is a former editor and group head of communications, RIL. Views are personal Tweets @therohitbansal. #DailyPioneer) |
