Who Decides to Print Indian Currency: Government or RBI? 90% People Don’t Know the Full Process of Currency Issuance

Indian Currency Rules: In times of cash shortage, you might wonder—why doesn’t the government just print more money and improve the cash flow? But the truth is, neither the Reserve Bank of India (RBI) nor the Government of India can make this decision freely. They must follow strict rules and guidelines to decide on printing new currency. Interestingly, even today, 90% of people are unaware of the entire process involved in issuing currency in India.

RBI, or the Reserve Bank of India, has the authority to print all notes except the one-rupee note. However, the final decision about how many notes to print in a year is made by the Government of India. Still, the government doesn’t act alone—it also follows rules and consults with economic experts before reaching a decision. Let’s understand the full process of how currency is issued in India.

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The Complete Currency Issuance Process

The process of approving new note printing happens in two major stages:

1. Stage One: The RBI sends a formal proposal to the central government, requesting permission to print a certain amount of currency.

2. Stage Two: The government consults a board of senior economists from the RBI to discuss and evaluate the proposal. Only after this discussion and approval does the RBI receive the green signal to begin printing the notes.

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Who Decides How Much Currency to Print Each Year?

While the final decision to print currency rests with the central government, it is not a decision taken lightly or independently. The government must follow several rules and consult experts. It also decides the design and security features of new currency notes.

The RBI, by law, has the authority to print notes up to the denomination of Rs. 10,000. If it needs to print higher denomination notes, it must seek special approval from the government.

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Factors Considered Before Printing Notes

When deciding to print new currency, both the RBI and the government must consider several economic indicators. These include:

• GDP (Gross Domestic Product)

• Growth rate

• Fiscal deficit, among others.

The printing of notes is based on these factors to maintain balance in the economy.

Since 1956, India has followed the Minimum Reserve System for printing currency. According to this system, the RBI must always keep a minimum reserve of Rs. 200 crore. Out of this, Rs. 115 crore must be in gold and Rs. 85 crore in foreign currency. This reserve is essential to ensure that the RBI remains financially stable and is never declared in default under any circumstance.

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Where Is Indian Currency Printed?

A common question people ask is: Where exactly are these notes printed?

In India, currency printing is done in four main locations:

• Nashik (Maharashtra)

• Dewas (Madhya Pradesh)

• Mysuru (Karnataka)

• Salboni (West Bengal)

Once the notes are printed, they are distributed to banks across the country. These banks then circulate the notes to the public through ATMs, counters, and other channels. These notes remain in circulation for several years.

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What Happens to Old Notes? The Reissue Process

As currency notes are used by people, they naturally get worn out over time. People deposit these damaged or old notes back into the banks. The banks, in turn, send them to the RBI.

The RBI then inspects the condition of these notes and decides whether:

• To reissue them (if they are in good enough condition)

• Or to destroy them (if they are too damaged)

This is how the note reissue and destruction process is managed.

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Final Thoughts

The process of printing Indian currency is more complex than it appears. It involves careful planning, multiple layers of approval, and adherence to strict rules and economic conditions. Neither the RBI nor the government can randomly decide to print more money—it’s a well-regulated process designed to maintain the economic stability of the country.

The next time you hold a rupee note in your hand, remember the long and detailed journey it took before reaching you—from RBI proposals and economic boards to printing presses and distribution networks. Understanding this process gives us a deeper appreciation of how a nation’s financial system works.