Many European trading companies came to India's during the 18th century. These trading companies set up private banks which issuedpaper currencies inIndian subcontinent first. But these notes were text-based.[1]Charles Canning, 1st Earl Canning first introduced paper currency in Indian subcontinent in 1861 officially.
India has a rich tradition offinancial instruments andhundi. In the modern sense, paper currency was introduced in India in the last half of the eighteenth century when private and semi-public banks began to introduce currency.The Paper Currency Act, 1861 gave the Government of India the exclusive right to print and circulate banknotes and thereby abolishes the printing and circulation of banknotes by the private Presidency Banks. Until the establishment of theReserve Bank of India on 1 April 1935, theGovernment of India continued to print and issue banknotes.[2][3]
The expansionist strategies of theEast India Company ledBengal to a scarcity of gold and silver bullion. Sensing an emerging credit crisis, theBritish official introduced paper currency in India.[4]
Warren Hastings established theBank of Hindostan (1770–1832) which was considered the general bank inBengal andBihar (1773–75) and the Bank of Bengal (1784–91) issued the bank notes initially. The government formed by the East India Company didn't recognize these paper currencies officially. These were restricted promissory currencies and only legal for private uses. Because of financial mishandling, the three banks were shut down and these notes were non-starters even in 1832. After the enactment of the paper currency act in 1861, a series of banknotes and coins were issued in the honor ofQueen Victoria in 1862 with her portrait on them.[5]
As the business of counterfeit notes increased, this new chain was introduced in 1867 and was divided into 5, 10, 20, 50, 100, 500, 1,000 and 10,000 rupees notes. In 1923, another series with the portrait ofGeorge V was introduced. It was divided into 1, 26, 5, 10, 50, 100, 1,000 and 10,000 rupees notes.[6][7]
In January 1936, theReserve Bank of India first issued five rupee notes containing the portrait ofKing George VI. Then in 10 February rupee notes, in March 100 rupee notes and in June 1938 1000 and 10000 rupee notes were released. Notes with a portrait of King George VI were issued in 1948 and later until 1950, after which notes with a picture of theAshoka Pillar were issued.[8]
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