The history of the Rupee traces back to the Ancient India in circa 6th century BC. Ancient India was the earliest issuers of coins in the world, along with the Chinese wen and Lydian staters. The word “rupee” is derived from a Sanskrit word “rūpaalu”, which means “wrought silver, a coin of silver”, in origin an adjective meaning “shapely”, with a more specific meaning of “stamped, impressed”, whence “coin”. It is derived from the noun rūpa “shape, likeness, image”. The word rūpa itself could have Vedic or Dravidian roots.
Vedic origin is more likely, as Sanskrit rūpá, n.,m. a form, beauty (Rigveda), rūpaka adjective and n.,m. a particular coin Pañcatantra, rūpya,*rūpiya-, adj. beautiful, bearing a stamp Pāṇini., n. silver Mahabharata. There is no evidence of transmission to Indo-Aryan from Dravidian and textual evidence dates to well before any references in the later Dravidian. Arthashastra, written by Chanakya, prime minister to the first Maurya emperor Chandragupta Maurya (c. 340–290 BCE), mentions silver coins as rupyarupa, other types including gold coins (Suvarnarupa), copper coins (Tamararupa) and lead coins (Sisarupa) are mentioned. Rupa means form or shape, example, Rupyarupa, Rupya – wrought silver, rupa – form. Among the earliest issues of paper rupees include the Bank of Hindostan (1770–1832), the General Bank of Bengal and Bihar (1773–75, established by Warren Hastings), and the Bengal Bank (1784–91).
The Indian rupee was a silver-based currency during much of the 19th century, which had severe consequences on the standard value of the currency, as stronger economies were on the gold standard. During British rule, and the first decade of independence, the rupee was subdivided into 16 annas. Each anna was subdivided into either 4 paisas. So one rupee was equal to 64 pice (paisa) In 1957, decimalisation occurred and the rupee was divided into 100 naye paise (Hindi/Urdu for new paisas). After few years, the initial “naye” was dropped. For many years in the early and mid-20th century, the Indian rupee was the official currency in several areas that were controlled by the British and governed from India; areas such as East Africa, Southern Arabia and the Persian Gulf.
Coins: The British settlements in Western India, South India, and the Eastern Province of Bengal (Calcutta) independently developed different coinages in consonance with the local acceptability of the coins for the purposes of trade.There are many fake coins of East India Company, with Indian gods depicted on the obverse side as shown in side-bar. Original East India Company coins show only the coat of arms of the East India Company.
The coins of Bengal were developed in the Mughal style and those of Madras mostly in a South Indian style. The English coins of Western India developed along Mughal as well as English patterns. It was only in 1717 AD that the English obtained permission from the Emperor Farrukh Siyar to coin Mughal money at the Bombay mint. The British gold coins were termed Carolina, the silver coins Anglina, the copper coins Cupperoon and tin coins Tinny. By the early 1830, the English had become the dominant power in India. The Coinage Act of 1835 provided for uniform coinage throughout India. The new coins had the effigy of William IV on the obverse and the value on the reverse in English and Persian. The coins issued after 1840 bore the portrait of Queen Victoria. The first coinage under the crown was issued in 1862 and in 1877 Queen Victoria assumed the title the Empress of India. The gold silver ratio expanded during 1870-1910. Unlike India, her colonial master Britain was on gold standard. To meet the Home Charges (i.e., expenditure in England) the colonial government had to remit a larger number of rupees and this necessitated increased taxation and unrest.
The 1911 accession to the throne of the King-Emperor George V led to the famous “pig rupee”. On the coin, the King appeared wearing the chain of the Order of the Indian Elephant. Through poor engraving, the elephant looked very much like a pig. The Muslim population was enraged and the image had to be quickly redesigned. RBI: The Reserve Bank of India was formally inaugurated on Monday, 1 April 1935 with its Central Office at Calcutta. Section 22 of the RBI Act, 1934, empowered it to continue issuing Government of India notes until its own notes were ready for issue. The bank issued the first five rupee note bearing the portrait of George VI in 1938. This was followed by Rs. 10 in February, Rs 100 in March and Rs 1,000 and Rs 10,000 in June 1938. The first Reserve Bank issues were signed by the second Governor, Sir James Taylor. In August 1940, the one-rupee note was reintroduced as a wartime measure, as a Government note with the status of a rupee coin. During the war, the Japanese produced high-quality forgeries of the Indian currency. This necessitated a change in the watermark. The profile portrait of George VI was changed to his full frontal portrait. The security thread was introduced for the first time in India. The George VI series continued till 1947 and thereafter as a frozen series till 1950 when post-independence notes were issued.
Following the Independence of India the Government of India brought out the new design Re.1 note in 1949. Initially, it was felt that the King’s portrait be replaced by a portrait of Mahatma Gandhi. Finally, however, the Lion Capital of Ashoka was chosen. The new design of notes were largely along earlier lines. In 1953, Hindi was displayed prominently on the new notes. The economic crisis in late 1960s led to a reduction in the size of notes in 1967. High denomination notes, like Rs. 10,000 notes were demonetized in 1978.
The first “Mahatma Gandhi Series” was introduced in 1996. Prominent new features included a changed watermark, windowed security thread, latent image and intaglio features for the visually handicapped. The five hundred (₹500) and one thousand rupee notes (₹1,000) were demonetised by an unscheduled address to the Nation by Prime Minister Narendra Modi starting from midnight 8 November 2016. These notes are being replaced by the Mahatma Gandhi New Series of notes.