Central govt can still print Re1 notes, says law ministry
08 September 2014
The law ministry has confirmed that the Government of India has all the powers to print currency notes of Rupee one denomination, ending a debate over allowing the central government to print notes in small denominations.
While the Reserve Bank of India (RBI) has the authority to issue bank notes of all denominational values above Re1 (Rs2, Rs5, Rs10, Rs20, Rs50, Rs100, Rs500, Rs1,000, Rs5,000 and Rs10,000), the one rupee note was printed and issued by the central government.
The Government of India also has the sole right to mint coins of all denominations.
The RBI was of the view that with the repeal of section 2 of the Currency Ordinance, the Government of India has lost powers to issue one rupee notes.
The law ministry, however, is of the opinion that the Coinage Act of 2011, which consolidates the laws relating to coinage and the mints, does not bar the government from printing one rupee notes.
Section 4 of the Act provides that the central government may authorise minting of coin of denomination not higher than Rs1,000, it said, adding that the definition of coin in the Act makes it clear that Government of India one rupee note is included in the definition of coin.
The Act defines a coin as "made of any metal or any other material stamped by the Government or any other authority empowered by the Government in this behalf and which is a legal tender including commemorative coin and Government of India one rupee note," the ministry said in its opinion.
"Further, apart from the metal, the coin may be made of any other material," it said.
The ministry said while repealing the Currency Ordinance, 1940, "necessary provisions for inclusion of Government of India one rupee note within the meaning of 'Coin' have been consciously incorporated in the Coinage Act, 2011. Further, the RBI, as per Section 24(1) of the RBI Act, 1934, is not empowered to issue bank note of denomination of value of one rupee."
"Central government is not precluded to issue one rupee Government of India note under the Coinage Act, 2011. The dimension, design, material and standard weight of such One Rupee Note have to be prescribed by the Central Government in terms of Section 4 and 5 of the Coinage Act, 2011," the opinion said.
The printing of notes in the denominations of Re1 and Rs2 has been discontinued as these denominations have been coinised. However, such notes issued earlier are still in circulation.