Chapter 1: History of The money

 The Indian rupee (, Unicode ₹) 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), although this division is now theoretical; as of 30 June 2011, coin denominations of less than 50 paise ceased to be legal tender.^[2][3] Banknotes are available in nominal values of 5, 10, 20, 50, 100, 500 and 1000 rupees. Rupee coins are available in denominations of 1, 2, 5, 10, 100 and 1000; of these, the  100 and  1000 coins are for commemorative purposes only; the only other rupee coin has a nominal value of 50 paise, since lower denominations have been officially withdrawn.

The Indian rupee symbol  (officially adopted in 2010) is derived from the Devanagari consonant "र" (Ra) with an added horizontal bar. The symbol can also be derived from the Latin consonant "R" by removing the vertical line, and adding two horizontal bars (like the symbols for the Japanese yen and the euro). The first series of coins with the rupee symbol was launched on 8 July 2011.

The Reserve Bank manages currency in India.The Reserve Bank derives its role in currency management on the basis of the Reserve Bank of India Act, 1934. Recently RBI launched a website Paisa-Bolta-Hai  to raise awareness of counterfeit currency among users of the INR.

      

                                                                        HISTORY

India

Rupiya issued by Sher Shah Suri, 1540–1545 CE

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.^[18] 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). Until 1815 the Madras Presidency also issued a currency based on the panam, with 12 panams to the rupee.

Historically, the rupee (derived from the Sanskrit word raupya, meaning "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 large quantities of silver in the U.S. and several European colonies resulted in a decline in the value of silver relative to gold, devaluing India's standard currency. This event was known as "the fall of the rupee".

India was unaffected by the imperial order-in-council of 1825, which attempted to introduce 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 through the British Raj and beyond. In 1835, British India adopted a mono-metallic silver standard based on the rupee; this decision was influenced by a letter written by Lord Liverpool in 1805 extolling 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 produced en masse at the Royal Mint in Sydney, New South Wales. In an 1864 attempt to make the British gold sovereign the "imperial coin", the treasuries in Bombay and Calcutta were instructed to receive gold sovereigns; however, these gold sovereigns never left the vaults. As the British government gave up hope of replacing the rupee in India with the pound sterling, it realized for the same reason it could not replace the silver dollar in the Straits Settlements with the Indian rupee (as the British East India Company had desired).

Since the silver crisis of 1873, a number of nations adopted the gold standard; however, India remained on the silver standard until it was replaced by a basket of commodities and currencies in the late 20th century.^{[citation needed]}

The Indian rupee replaced the Danish Indian rupee in 1845, the French Indian rupee in 1954 and the Portuguese Indian escudo in 1961. Following the independence of British India in 1947 and the accession of the princely states to the new Union, the Indian rupee replaced all the currencies of the previously autonomous states (although the Hyderabadi rupee was not demonetized until 1959). Some of the states had issued rupees equal to those issued by the British (such as the Travancore rupee). Other currencies (including the Hyderabadi rupee and the Kutch kori) had different values.

One-rupee banknote

Obverse of one-rupee note

The values of the subdivisions of the rupee during British rule (and in the first decade of independence) were:

• 1 rupee = 16 Anna (later 100 naye paise)
• 1 artharupee = 8 Anna, or 1/2 rupee (later 50 naye paise)
• 1 pavala = 4 Anna, or 1/4 rupee (later 25naye paise)
• 1 beda = 2 Anna, or 1/8 rupee (later equivalent to 12.5 naye paise)
• 1 anna = 1/16 rupee (later equivalent to 6.25 naye paise)
• 1 paraka = 1/2 Anna (later equivalent to 3.125 naye paise)
• 1 kani (pice) = 1/4 Anna (later equivalent to 1.5625 naye paise)
• 1 damidi (pie) = 1/12 Anna (later equivalent to 0.520833 naye paise)

In 1957, the rupee was decimalised and 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, similar to the usage of "two bits" in American English for a quarter-dollar.

[edit]Straits Settlements

The Straits Settlements were originally an outlier of the British East India Company. The Spanish dollar had already taken hold in the Settlements by the time the British arrived during the 19th century; however, the East India Company tried to replace it with the rupee. This attempt was resisted by the locals; 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.

[edit]International use

With Partition the Pakistani rupee came into existence, initially using Indian coins and Indian currency notes simply overstamped with "Pakistan". Previously 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 outside the country with the Reserve Bank of India (Amendment) Act of 1 May 1959. The creation of a separate currency was an attempt to reduce the strain on India's foreign reserves from 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; both currencies are accepted in Bhutan. The Nepalese rupee is pegged at 0.625 Rs; the Indian rupee is accepted in Nepal, although 500- and 1000-rupee banknotes are banned.^[19] Sri Lanka's rupee is not related to India's currency; it is pegged to the US dollar.^[19]

Reference link:
       http://en.wikipedia.org/wiki/Indian_rupee