History of The Indian Rupee
India was one of the first issuers of coins (circa: 7th/6th century BC), and as a result it has seen a wide range of monetary units throughout its history. There is some historical evidence to show that the first coins may have been introduced somewhere between 2500 and 1750 BC. However, the first documented coins date from between the 7th/6th century BC to the 1st century AD.
The Hindi word rūpaya is derived from Sanskrit word rūpya, which means “wrought silver, a coin of silver“.
Arthashastra, written by Chanakya, prime minister to the first Maurya emperor Chandragupta Maurya (c 340-290 BCE), mentions silver coins as ‘rupyarupa‘, other types of coins including gold coins (Suvarnarupa), copper coins ( Tamararupa) and lead coins (Sisarupa) are also mentioned.
Over the next few centuries, as traditions developed and empires rose and fell, the country’s coinage designs reflected its progression and often depicted dynasties, socio-political events, deities, and nature. This included dynastic coins, representing Greek Gods of the Indo-Greek period followed by the Western Kshatrapa copper coins from between the 1st and the 4th Century AD.
In 712 AD, the Arabs conquered the Indian province of Sindh and brought their influence and coverage with them. By the 12th Century, Turkish Sultans of Delhi replaced the longstanding Arab designs and replaced them with Islamic calligraphy. During his five-year rule from 1540 to 1545, Afghan king Sher Shah Suri issued a coin of silver, weighing 178 grains, which was termed the Rupiya.
The silver coin remained in use during the Mughal period, Maratha era as well as in British India.
The princely states of pre-colonial India minted their own coins, all which mainly resembled the silver Rupee, but held regional distinctions depending on where they were from. During the late 18th Century when political unrest occurred, agency houses developed banks such as the Bank of Bengal and Bahar, The Bank of Hindustan, Orient Bank Corporation and The Bank of Western India. These banks also printed their own paper currency in the Urdu, Bengali and Nagri languages.
The period before 1861 was of free banking in which established banks were at liberty to issue bank notes. The semi—government owned Presidency banks dominated this activity as their notes were accepted by the Government. For this privilege, Presidency banks had to submit themselves to the legislative controls including restrictions on the kind of business the banks could engage in. The limits of the note issue were determined as a proportion of the capital as well as cash in hand.
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