Structured Research Paper on Indian Currency
I. Introduction
The Indian currency, known as the Indian Rupee (INR), plays a vital role in shaping the country’s
economy, monetary policy, trade, and financial stability. This research aims to examine the historical
evolution, structure, significance, and challenges related to Indian currency, with reference to the
Reserve Bank of India's regulations, demonetization, and digital currency initiatives.
II. Objectives of the Study
1. To analyze the historical development of Indian currency.
2. To understand the current structure and denominations in circulation.
3. To study major policy changes such as demonetization and introduction of digital currency.
4. To evaluate the impact of currency reforms on the Indian economy.
5. To suggest measures for strengthening currency management.
III. Historical Background
• The Indian currency system has evolved from barter and cowrie shells to metallic coins
under Mauryas and Guptas, to paper currency introduced in the 18th century by private
banks.
• The Reserve Bank of India (RBI) was established in 1935, becoming the sole issuer of
currency in India.
• The decimal system was introduced in 1957, replacing the older anna system.
IV. Current Structure of Indian Currency
A. Denominations
Banknotes:
• ₹10, ₹20, ₹50, ₹100, ₹200, ₹500
• ₹2000 (introduced in 2016, withdrawn from circulation in 2023 but still legal tender)
Coins:
• ₹1, ₹2, ₹5, ₹10
• 50 paise and smaller coins are legal but rarely used
B. Currency Symbol
• The ₹ symbol was adopted in 2010, combining the Devanagari “र” and Latin “R”.
V. Role of the Reserve Bank of India
• Currency Issuance: RBI is solely authorized to issue banknotes in India under Section 22 of
the RBI Act, 1934.
• Currency Management: RBI ensures clean notes, counterfeit detection, and replacement of
old notes through regional offices and currency chests.
VI. Major Currency Reforms
1. Demonetization (2016)
• ₹500 and ₹1000 notes were demonetized on 8th November 2016.
• Aimed to curb black money, counterfeit currency, and terrorism funding.
• Led to short-term liquidity crunch and long-term digitization growth.
2. Digital Rupee (CBDC)
• In 2022, RBI launched a pilot for a Central Bank Digital Currency (CBDC).
• Goal: Enhance financial inclusion, reduce currency printing cost, and support digital
payments ecosystem.
VII. Challenges in Indian Currency Management
• Counterfeit Currency
• Currency Hoarding and Circulation Imbalance
• Transition to Digital Payments
• Public Awareness and Misinformation
• Cost of Printing and Distribution
VIII. Recommendations
1. Enhance Counterfeit Detection Mechanisms
2. Encourage Usage of Lower Denominations
3. Promote Financial Literacy about Currency and Digital Payments
4. Strengthen CBDC Infrastructure and Security
5. Eco-friendly Currency Production: Use polymer notes or recyclable materials.
IX. Conclusion
Indian currency reflects the economic, political, and technological evolution of the nation. With rapid
changes like demonetization and the rise of digital currency, effective management and public trust
are critical. A transparent, secure, and inclusive currency system is essential for India’s sustainable
economic growth.
X. References
• Reserve Bank of India Reports and Bulletins
• RBI Act, 1934
• Government of India Circulars on Demonetization
• Economic Survey of India (2016-2022)
• International Monetary Fund (IMF) Reports on CBDC
• Scholarly Articles on Indian Monetary Policy
