BANKING AFFAIRS

Detailed explanation-1: -The RBI is mandated by the Minimum Reserve System to keep a reserve of an amount of about Rs 200 crore in gold coins, gold bullion with the remainder in foreign currency. Ans. Soiled and disfigured banknotes that are unfit for circulation are removed from circulation after being properly recorded in the RBI’s records.

Detailed explanation-2: -It was adopted in 1956. The Minimum Reserve System which requires the RBI to keep a minimum reserve of Rs 200 crores comprising foreign currencies, gold coin and gold bullion (minimum of Rs 115 crore in the form of gold). There is no limit for the RBI to issue currencies by keeping this minimum reserve.

Detailed explanation-3: -The Minimum Reserve System (MRS) is followed from 1956 onwards. Under the Minimum Reserve System, the RBI has to keep a minimum reserve of Rs 200 crore comprising of gold coin and gold bullion and foreign currencies. Out of the total Rs 200 crores, Rs115 crore should be in the form of gold coins or gold bullion.

Detailed explanation-4: -Gold is a good hedge during times of uncertainty and economic turmoil, so every major central bank keeps some of its reserves in gold. Gold prices rise when the economy is in flux, as was the case in 2020 when the economic turmoil caused by Covid reached an all-time high of $2, 067 per ounce.

Detailed explanation-5: -Facts about Re 1 note Printing of the note was discontinued in 1994 because of high printing cost and after a gap of 22 years in 2015, it was reintroduced. Issued as a promissory note, the one rupee paper currency was printed in England.