The Paper Currency Act, 1861
Imperial Legislative Council (India)
  • An Act to consolidate and amend the law relating to the Government Paper Currency
CitationAct No. 3 of 1861
Enacted byImperial Legislative Council (India)
Enacted1861
Commenced1861
Status: Repealed

The Paper Currency Act, 1861 is an act in India dating from the British colonial rule, that is currently no longer in force.

Background

Before the passing of the Act, there were a number of commercial banks in India which issued their own banknotes to the general public. Some of these commercial banks included:[1]

The East India Company, which then ruled over large parts of India, wanted to take away this power of issuing banknotes from the commercial banks, as a result of which The Paper Currency Act, 1861 was enacted into law.[2]

Tenets and Precepts

After the enactment of the Act, the East India Company government became the sole issuer of banknotes in India.[2]

The three Presidency Banks of India became the issuer of banknotes on the behalf of the East India Company:[3]

Repealment

Just a few years before the Independence of India, the Reserve Bank of India Act, 1934 was passed which effectively repealed The Paper Currency Act, 1861. From now onwards, the Reserve Bank of India became the sole issuer of banknotes in India.[4]

References

  1. ↑ "Reserve Bank of India". www.rbi.org.in.
  2. 1 2 "Cash of the titans: How India's paper money came to be". Hindustan Times. 26 March 2021.
  3. ↑ Burange, L. G.; Ranadive, Rucha R. (December 2011). "Indian Currency, Exchange Rate Regime and Policy: A Retrospective View" (PDF). University of Mumbai.
  4. ↑ "Dose of history: How paper currency came in India 150 years ago". India Today. 22 November 2016.
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