Currency Management in India: Notes, Coins and Polymer Notes

India has two money-makers, not one. The RBI handles notes. The Government handles coins. Once you remember this split, many exam questions become easy.

Notes: the RBI’s job

• Under Section 22 of the RBI Act, 1934, the RBI has the sole right to issue banknotes.
• Under Section 25, the Centre approves a note’s design, form and material.
• It does this after looking at the RBI Central Board’s advice.
• Under Section 24, notes can go up to ₹10,000.
• Under Section 33, notes are backed by assets like gold and foreign securities.

Coins and the ₹1 note: the Government’s job

• The Government of India designs and mints all coins, under the Coinage Act, 2011.
• The RBI only distributes coins. They reach the public only through the RBI (Section 38).
• The ₹1 note is also issued by the Government, not the RBI.

• Notes are printed at four presses.
• Nashik and Dewas belong to the Government, through SPMCIL.
• Mysuru and Salboni belong to the RBI, through its subsidiary BRBNMPL.
• Coins are made at four mints: Mumbai, Hyderabad, Kolkata and Noida.
• All four mints belong to SPMCIL.
• SPMCIL was formed on 13 January 2006. It brought the Finance Ministry’s presses, paper mills and mints under one company.

A note does not go straight from the press to your wallet. It passes through several hands on the way.

• Each year, the RBI estimates how many notes are needed.
• It looks at growth, inflation and the rise of digital payments.
• It also counts how many worn notes must be replaced.
• Currency chests are stores at banks that hold notes and coins for the RBI. There were 2,691 in February 2025.
• Under the clean note policy, only fit notes go back out. Soiled and torn notes are destroyed.
• Printing of ₹2 and ₹5 notes has stopped. These are now coins, as notes cost too much for their short life.

Legal tender is money that the law says must be accepted to settle a debt. A shopkeeper cannot refuse a valid ₹100 note for a ₹100 bill.

• Under Section 26, every RBI note is legal tender anywhere in India.
• Each note is guaranteed by the Central Government.
• The ₹1 note issued by the Government is legal tender too.
• Coins of ₹1 and above are legal tender for up to ₹1,000 in one transaction.
• The 50 paise coin is legal tender only up to ₹10.
• You may still accept more coins by choice. The limit only stops anyone forcing you to.
• The old ₹500 and ₹1,000 notes stopped being legal tender from midnight of 8 November 2016.
• The ₹2,000 note still remains legal tender.

Central banks change note designs from time to time. The aim is to stay ahead of counterfeiters. India’s current design, the Mahatma Gandhi (New) Series, came in 2016.

• Watermark: hold the note to light. Gandhi’s portrait and the number appear.
• Security thread: a thin strip that glows under ultraviolet (UV) light.
• See-through register: half the number is on the front, half on the back. Against light, they join up.
• Intaglio printing: raised ink you can feel. It helps people with low vision too.
• Colour-shifting ink: on ₹200 and ₹500, the number turns from green to blue when tilted.
• Latent image: a hidden number that shows when the note is held flat at eye level.
• Micro letterings: tiny text, best seen under a magnifying glass.
• Fluorescence: number panels and fibres glow under a UV lamp.

What the Government approved (August 2026)

• On 11 August 2026, the Finance Minister gave a written reply in the Rajya Sabha.
• The Government approved one billion each of ₹10 and ₹20 polymer notes for field trials.
• The RBI had sent the proposal under Section 25, on its Central Board’s advice.
• If the trials work, these notes will be issued regularly.
• They will circulate alongside paper notes, not replace them.
• Procurement is at an early stage, so no launch date or cost is fixed yet.
• (The Hindu; Swarajya)

Paper vs polymer

• Polymer notes resist dirt, water and tearing.
• So they last longer than paper notes.
• They cost more to make. But fewer replacements can save money over time.
• Australia issued the first modern polymer notes in 1988.

India tried once before

• Over a decade ago, the Government planned a trial of one billion ₹10 polymer notes.
• Five cities were picked for their different climates: Kochi, Mysuru, Jaipur, Shimla and Bhubaneswar.
• That plan never moved beyond the trial idea. One problem was that many ATMs could not handle such notes well.
• (Deccan Herald, 2013; The Federal)