presentation currency 12

8/3/2019 Presentation Currency 12

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BY:-AYUSHI DWIVEDI(081436)

PRANAV SHANDIL(081438)

KARAN SOOD(081442)


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What is a Banknote? Banknotes are Indian Currency Notes authorized to

put into circulation among public only by ReserveBank of India (RBI). Since RBI is the sole authority toissue notes they are called Banknotes.


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What is a Currency Note? Currency Note is the same banknote pertaining to our

Nation Indian Currency Note is called Indian Rupee(INR)


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Notes issued by RBI At present, banknotes in India are issued in the

denomination of Rs.10, Rs.20, Rs.50, Rs.100, Rs.500,Rs.1000.

Banknotes issued by RBI in the denominations of Rs.2 andRs.5 has been discontinued and replaced fully with coins.

Bank can also issue notes in the denomination of Rs.5000and Rs.10000

Notes of higher denominations of Rs.1000,Rs.5000 andRs.10000 issued earlier (before 1946 and 1954) have beendemonetized in 1978 and are no longer in circulation.

Rs.500 demonetized in 1946 were reintroduced in 1987 andin the year 2000, Rs.1000 notes were reintroduced


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Issue of Notes and Coins The issue of fresh notes and coins is conducted by RBI

in the Issue Department. These fresh notes are stocked the Currency Chest of

RBI and other agencies. The currency chest is provided to a branch of public

sector bank or to a Government Treasury, which hasopted to function as an agent of RBI.

Thus we have as on June 2007 a wide net work of 4,301currency chests and 4,027 small coin depots apart from18 Issue Offices, a sub-office at Lucknow and acurrency chest at Kochi of Reserve Bank of India.


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TOTAL VALUE OF COINS IN

CIRCULATION

In 1970-1971 - Rs 390cr

In 1990-1991 - Rs 1,620cr In 2000-2001 - Rs 6,350cr

In 2008-2009 - Rs 9,957cr

In 2009-2010 - Rs 11,010cr


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TOTAL VALUE OF CURRENCY NOTES

In 1970-1971 - Rs 4,170cr

In 1990-1991 - Rs 53,660cr In 2000-2001 - Rs 2,12,850cr

In 2009-2010 - Rs 7,88,279cr


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VOLUME OF MONEY SUPPLY The supply of money with the public in India OR The

volume of money in circulation refers to the volume ofmoney held by the people in the country.

The two important components are:-

CURRENCY COMPONENT:-Consists of coins andcurrency notes issued by central bank which are in

circulation.


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DEPOSIT COMPONENT:-Consists of deposits of thegeneral public with banks ,which they withdrawthrough bank cheques and ATM cards.

In 1970-1971 - Rs 7,340cr

In 1990-1991 - Rs 92,890cr

In 2000-2001 - Rs 1,69,900cr

In 2009-2010 - Rs 7,17,943cr


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Soiled Notes Soiled notes are those which have become dirty and slightly cut. The

cut in such notes, should, however, not have passed through thenumber panels.

All these notes can be exchanged at the counters of any public sectorbank branch, any currency chest branch of a private sector bank or anyIssue Office of the Reserve Bank of India.


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Mutilated Notes Notes which are in pieces and/or of which the essential portions are

missing.

Essential portions in a currency note are name of issuing authority,

promise clause, signature, Ashoka Pillar emblem/portrait of MahatmaGandhi, water mark.


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Clean Note Policy Ensuring adequate availability of good quality banknotes and coins is one of the core

functions of RBI. Towards this various measures were initiated by RBI viz. speedier disposal of soiled

banknotes, discontinuance of the practice of stapling of note packets, supply of adequatequantity of fresh notes to banks and mopping up of soiled and mutilated notes,particularly notes of lower denominations from circulation, regular removal of soiledbanknotes from the currency chests and acceleration in mechanized processing of thenotes at the offices of the RBI as also at Currency Chests by installing CVPS . Thus, therehas been marked improvement in the quality of banknotes in circulation.

Reserve Bank of India has been continuously making efforts to makegood quality banknotes available to the members of public. To helpRBI and banking system, the members of public are requested toensure the following: Not to staple the banknotes Not to write / put rubber stamp or any other mark on the banknotes Store the banknotes safely to prevent any damage


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CVPS Currency Verification and Processing System.

The currency verification and processing systems have

been installed in the Reserve Bank offices for fasterand secured processing of soiled currency notes.

So far the Reserve Bank has installed 42 CVPS at itsvarious Issue Offices to supplement the manual

processing of notes.


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Each CVPS is capable of processing 50,000 - 60,000notes per hour.

It counts, examines the genuineness of notes, sortsnotes into fit and unfit and destroys the unfit notes on-line.

The shreds are on-line transported to a separate

briquetting system where they are compressed intobriquettes of small size. The briquettes can be used asresidual fuel in industrial furnaces.


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HOW MUCH MONEY CAN A

COUNTRY PRINT? There is a common misconception that a countrys

currency is backed by the gold it holds. But, this is simplynot true any country can print as much money as they

want, and they dont need to have any gold to back theircurrency.

In fact, in recessionary times countries do resort toprinting money, or what is known as Quantitative Easing,

a term that became popular just after the recession. Quantitative Easing refers to the actions by Central Banks

that create liquidity in the economy by printing money.


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But, that measure is only for extreme situations, and isalso considered dangerous because printing moneycauses inflation in an economy, and if you print toomuch money you can get hyper inflation also.


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How does printing money cause

inflation?Demand and Price

Its quite obvious that a lot more of a product will

sell at Rs. 5,000 than they will at 25,000. In this example at 1 rupee you demand 100 units

of a commodity, but at Rs. 2 you demand just 30.


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SUPPLY AND PRICEA lot more suppliers will be willing to get into a

business if the end product sells at a higher rate.

So, supply will be high at higher prices, and that curvewould look as shown in the graph.

In this example you want to supply just 50 units atRs. 1.20, but when the price shoots up to Rs. 2.15 you

are willing to supply as much as 120 units.


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How is the price finally fixed? The price of any product is largely determined by its

demand and supply, and when you super impose theprice curve and demand curve the intersection iscalled the equilibrium price, and it is generallybelieved that prices will move towards this point andstabilize here.


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The blue star indicates the equilibrium price


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What will happen if the government prints

money and hands it out to its citizens? Consumption or demand of certain things also rises

with your income.

Now, for example, instead of demanding 30 units atRe. 1 you will now demand 50 units at Re. 1 andinstead of demanding only 100 units at Rs. 2 you willnow demand 120 units at Rs. 2.

This will have the impact of shifting the demand curveto the right, and pushing the price of the commodityupwards.


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The green star indicates the price which will be fixed due to

the new realities of increased notional wealth, and peopledemanding more because their wealth has been increased.

People feel that they are richer and start spending more,and as a result prices rise as well.


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MONEY SUPPY WITH PUBLIC IN

INDIA IN 2011 (A)Currency with the public:->(a+b+c-d) - Rs9,14,170

(a).Notes in circulation Rs 9,36,935Cr

(b).Circulation if rupee coins Rs 11,018Cr (c).Circulation of small coins Rs 1,568Cr

(d).Cash on hand with banks Rs 35,351Cr


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(B)Deposit money with the public (i+ii)

(i).Demand deposit of banks - Rs 7,13,735

(ii).Other deposit with RBI Rs 3,740 Money Supply (M1) with the public (A+B) Rs

16,31,645

SHEET1.
http://ier722rm1111.xls/http://ier722rm1111.xls/


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MONEY STOCK MEASURES M1=currency with the public ,ie coins and currency

notes + demand deposits of the public.It is also knownas narrow money.

M2=M1+ Post Office savings deposits.

M3=M1 + Time deposits of the public with banks.Alsoknown as broad money.

M4=M3 +Total post office deposit.


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M2,M3 AND M4 Post office saving deposit Rs 5,041

Hence M2=M1 + Rs 5,041 = Rs 16,36,686

Time deposits with banks = Rs 48,60,111

Hence M3=M1 + Rs 48,60,111 = Rs 64,91,756 Total post office deposits = Rs 25,969

Hence M4=M3 + Rs 25,969 = Rs 65,17,725

STOCK MEASURES
http://stock%20measures.htm/http://stock%20measures.htm/


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CURRENCY MANAGEMENT The Reserve Bank manages currency in India. The Government,

on the advice of the Reserve Bank, decides on the variousdenominations. The Reserve Bank also co-ordinates with theGovernment in the designing of bank notes, including the

security features. The Reserve Bank estimates the quantity ofnotes that are likely to be needed denomination-wise and placesthe indent with the various presses through the Government ofIndia. The notes received from the presses are issued and areserve stock maintained. Notes received from banks and

currency chests are examined. Notes fit for circulation arereissued and the others (soiled and mutilated) are destroyed soas to maintain the quality of notes in circulation. The ReserveBank derives its role in currency management on the basis of theReserve Bank of India Act, 1934.


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GOVERNMENT ROLE The responsibility for coinage vests with Government

of India on the basis of the Coinage Act, 1906 asamended from time to time. The designing and

minting of coins in various denominations is alsoattended to by the Government of India.

ACT 1906
http://indiancoinageact1906.pdf/http://indiancoinageact1906.pdf/


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VOLUME OF CURRENCY NOTES The Reserve Bank decides upon the volume and value

of bank notes to be printed. The quantum of banknotes that needs to be printed broadly depends on the

annual increase in bank notes required for circulationpurposes, replacement of soiled notes and reserverequirements.

The Government of India decides upon the quantity ofcoins to be minted.


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Printing of Notes and Minting of

Coins Notes are printed by Government of India at its

printing presses at Nashik and Dewas and at thepresses of Bharatiya Reserve Bank Note MudranPrivate Ltd. (BRBNMPL) at Mysore and Salboni.

Coins are minted at the four Government Mints atMumbai, Kolkata, Noida and Hyderabad.

Presses are required to produce around 12,000 millionpieces of notes per annum to maintain clean notes in

circulation. The average life of a note in circulation varies from 1

year to 2 years.


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Rupee coins and Small coins Rupee coins and Small coins are issued by Government

of India through RBI.

Rupee coins are Re.1, Rs.2 and Rs.5 and Small coins are

issued in the denominations of Ps.25 and Ps.50. Thehighest denomination of coin that can be issued byGOI is Rs.1000 as per Section 6 of Coinage Act, 1906.

ACT,1906
http://indiancoinageact1906.pdf/http://indiancoinageact1906.pdf/


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DEMAND ESTIMATION The Reserve Bank estimates the demand for bank

notes on the basis of the growth rate of the economy,the replacement demand and reserve requirements by

using statistical models.


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CURRENCY DISTRIBUTION The Reserve Bank manages the currency operations

through its offices located at Ahmedabad, Bangalore,Bhopal, Bhubaneshwar, Belapur(Navi Mumbai),

Kolkata, Chandigarh, Chennai, Guwahati, Hyderabad,Jaipur, Kanpur, Lucknow, Mumbai (Fort), Nagpur, NewDelhi, Patna and Thiruvananthapuram.

These offices receive fresh notes from the note presses.

Similarly, the Reserve Bank offices located at Kolkata,Hyderabad, Mumbai and New Delhi initially receivethe coins from the mints. These offices then send themto the other offices of the Reserve Bank.


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CURRENCY CHEST To facilitate the distribution of notes and rupee coins,

the Reserve Bank has authorised selected branches ofbanks to establish currency chests. These are actually

storehouses where bank notes and rupee coins arestocked on behalf of the Reserve Bank. At present,there are over 4422 currency chests. The currencychest branches are expected to distribute notes and

rupee coins to other bank branches in their area ofoperation.


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SHORT SUPPLY OF BANK NOTES

AND COINS This is not entirely correct. It is true that till recently

the demand for currency was more than their supply.The primary reason for this is that the Indian society is

still predominantly cash-driven. However, at presentthere are no supply constraints so far as bank notes areconcerned. As regards coins, Government of India aretaking various steps, including importing rupee coins.

The impression of coins being in short supply is alsoenhanced probably due to peoples preference fornotes.


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STEPS TO INCREASE SUPPLY OF

BANKNOTES & COINS Yes, several steps have been taken to augment the supply of bank notes

and coins. Some of these are: The existing note printing presses and the mints owned by the

Government are being modernised.

Two new currency printing presses with the state-of-the-art technologyhave been set up under the aegis of the Bharatiya Reserve Bank NoteMudran Ltd., a wholly owned subsidiary of the Reserve Bank.

To bridge the demand-supply gap, the Government had, as a one-timemeasure, even imported bank notes.

The production capacity of the four India Government Mints are being

augmented. Government of India has also been importing rupee coins tosupplement the supply of coins from the four mints. Till date 2 billionrupee coins have been imported.


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Rs1,2,and 5 notes not being

printed?Volume-wise, the share of such small denomination

notes in the total notes in circulation was as high as 57per cent but constituted only 7 per cent in terms of

value. The average life of these notes was found to bearound a year. The cost of printing and servicing thesenotes was, thus, not commensurate with their life.Printing of these notes was, therefore, discontinued.These denominations were, therefore, coinised.However, it has been decided that notes in thedenomination of Rs.5 be re-introduced so as to meetthe gap between the demand and supply of coins inthis denomination.


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presentation currency 12

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