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May 03, 2012



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Money, a wonderful term. I don't think that I should explain more about It. But here are some important points which are useful for Banking Exams. 

Functions of Money :

Money is what money does. Money discharges Five functions.
  1. Medium of Exchange
  2. Measure of Value
  3. Store of Value
  4. Standard of Deferred Payments.
  5. Transfer of Value

Some more important points about Money are....

  • RBI deals with three monetary aggregates. M1, M2 and M3.
  • M1 and M3 are known as "Narrow Money" and "Broad Money" respectively. M4 is dropped.
  • M0 is reserve money ; M0 = Currency in circulation + Other deposits with RBI + Cash Reserves.
  • M3 growth in India is 17% for 2009-10. M3 = M1 + Net time deposits of Banks.
  • Decimal system of Coinage started in India on 1st April 1957.
  • Rs 2 and above currency and coins are issued by RBI but printing of Rs 1, 2 and 5 notes were discontinued.
  • Currency notes by RBI are issued as per Minimum Reserve System 1957 according to which Rs 115 Cr. worth Gold and Rs 85 Cr. worth Foreign securities to be kept as reserve.
  • Paper Currency was introduced in India in 1882.
  • Indian Rupee Coin was introduced during the regin of Sher Shah Suri (1484 - 1545 AD).
  • Barter system existed in ancient times which means exchange of goods and services for goods and services.
  • There are 15 languages on 10 Rupee Note. 1000 Rupee currency notes are in circulation since Oct 9th 2000 after gap of 22 years. Parliament approved the mining of Rs 10 coin on 11th August 2011. Coins of Rs 2 and Rs 5 are in circulation since 1990.
  • Indian Rupee is a token money. Indian rupee is accepted as legal tender in Nepal and Bhutan.
  • Y.V.Reddy, RBI working group on money supply, has introduced a new concept "Liquid measures i.e., L1, L2, L3 on 23-06-1998.


  1. parliament approved the minting of Rs 10 coins and not Rs 1000 coins as posted here.


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