The Government of India takes the decision to print new notes and coins for the country, while the Reserve Bank of India has the exclusive right to carry out this task. Under this process, the RBI proposes to the central government to print notes and coins. Thereafter, the central government consults senior officials and economists of the RBI for the final decision. Finally, once a decision is made, the process allows the RBI to print notes and coins.
This process also applies in the case of demonetization of the notes and coins. In India, many times, notes and coins have been withdrawn from circulation. In the year 2016, 500 and 1000 notes were demonetized. Last year, the Reserve Bank of India also demonetized the notes of 2000. Here is the bank’s important decision about the 5-rupee coin.
Discontinue 5 coins
Long ago, currency notes and coins ruled the earth. At present apart from 5, 10, and 20 rupee coins, 100, 200, and 500 rupee notes are in circulation. Now, they say that thick 5 rupee coins disappear in the long term: they are replaced by thin golden ones in currency. It is observed that these thick coins were commonly used. This change is difficult for common men in performing daily actions as well as for transport and other services, where demand for the coin is high in the public.
Money value is more than the surface value-
It is said that every coin has two types of values- one is that value which is called surface value; and the name of other is metal value. For example, the value of 5 rupees on the coin represents its surface value and the value which is obtained after melting the metal of which it is made is termed as metal value. The old 5 rupee coin was having metal value coming more than its surface value and people started abusing it. Therefore, the old five rupee coin was discontinued by RBI and minting new coins was done in the markets.
The Prices of Blades-
Old 5 rupee coins gave birth to the making of shaving blades from the same metal out of which coin was produced. People started melting these coins to make blades when they knew that the same metals were used to make blades. These coins were found being sent illegally to Bangladesh, where 6 blades were made by melting only one coin. One blade’s cost was 2 rupees, so a 5 rupee coin was earning 12 rupees.
RBI took the decision regarding the cases above-
The government initiated an inquiry on receipt of information that its 5 rupee coins are being illegally used in India. The Reserve Bank of India then took the initiative and decided, in wake of the serious investigation of the matter, to introduce new coins in place of the old coins.
The old 5 rupee coins have been changed as to their metals after investigation and also the thickness of the coins has been reduced as well. This measure was taken with the objective of preventing illegal activities. Along with that, new coins were also issued to provide a proper and safe currency to the masses.
