The rupee is the official currency of India. The rupee is an ancient currency that has been modernized into a decimalized system of 1 rupee to 100 paise. However, all denominations below a half-rupee were taken out of circulation and made illegal tender as of June 2011. The rupee is regulated by the Reserve Bank of India. The word rupee is derived from the Sanskrit word for silver. However, many common languages in India use a variation of the of the word tanka, which means money, instead of the word rupee. Because of this, rupee is written differently on different versions of banknotes. Instead of using the standard system of counting large monetary amounts in millions and billions, Indian rupees are counted by lakhs, for 100 thousand, and by crores, for 10 million.
India was one of the first civilisations in the world to issue coins, the first being issued around the 6th century BC. The first rupee coin was introduced sometime between 1486 AD and 1545 AD. The rupee silver piece was originally subdivided into 40 copper pieces, or paisa. In 1825, the British issued a decree that all colonies would be required to adopt pounds sterling as the official currency, but India was allowed an exception until the imperial government unsuccessfully attempted to force Australian-minted British gold sovereigns into the two main treasuries of India. When Indian officials refused to use the sovereigns, no further attempts were made. In fact, India stayed on the silver standard until the second-half of the 20th century, well past the time when most other countries had converted to the gold standard.
In 1934, India passed the Reserve Bank of India Act, and the Reserve Bank of India was established the following year in Calcutta. It subsequently moved to Mumbai in 1937. The reserve bank began being privately owned but was nationalized later, in 1949. The Reserve Bank was originally established to regulate the issuance of banknotes, maintain reserves and to operate the credit and currency systems of India. However, many of the bank’s early years were spent creating a stronger financial infrastructure.
Rupee coins are issued by the Reserve Bank but minted by the India Government Mint. Coin denominations begin at 50 paise, with rupee coins in denominations of 1, 2, 5 and 10 rupees. Banknotes are issued in denominations of 5, 10, 20, 50, 100, 500 and 100 rupees.