BANKING AFFAIRS

Detailed explanation-1: -The RBI’s current currency-issuing system is known as the Minimum Reserve System. It was passed into law in 1956. The RBI is required to retain a minimum reserve of an amount of about Rs 200 crores in foreign currencies, gold coins, and gold bullion under the Minimum Reserve System.

Detailed explanation-2: -The Minimum Reserve System is the currency issue system followed by the RBI at present. 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).

Detailed explanation-3: -This system is applicable in India since 1956. According to this system, the Reserve Bank of India has to maintain assets of at least 200 crore rupees all the times. Out of this 200 crore, the 115 cr rupee should in the form of Gold or gold bullion and rest 85 cr. should be in the form of foreign currencies.

Detailed explanation-4: -The RBI follows the minimum reserve system, wherein it has to maintain a minimum quantity of gold bullion as reserves to issue currency.

Detailed explanation-5: -Simple Deposit System: Under this system, the monetary authority is required to keep 100% of the bullion (gold or silver) for every note issued. That is why it is also known as the Full Reserve System.