Procedure followed to Issue Currency

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Is Currency Note Issued Asset or Liability? Who issues this Note? Reserve Bank of India (Central Bank) What line does it contain? It contains a line I promise to pay the bearer the Sum of 500 Rupees This is Signed by Governor RBI has to pay So,It means it’s a liability of RBI Procedure Followed By Central Bank To Issue Currency When Govt wants to print a currency, it gives securities to the RBI (called Govt Security) against which RBI issues currency Example Suppose Govt issues Securities for Rs 100 Crore to RBI RBI issues currency notes of Rs 100 Crore and gives it to bank. Bank issues 80 Crore notes to Public and keep 20 Crore in its Safety Vault Government Issues Govt Security or Bonds Rs 100 Cr Issue Currency Rs 100 Cr 80 Crore 20 Crore Public Currency Issued Against Gold And Foreign Exchange Sometimes, Central Bank purchases Gold and Foreign exchange from market against which it issues currency Example Suppose RBI purchase gold from Market of Rs 140 Crore and Gold of 60 Crore. Against this 100 Crore , it issues currency to Public of 200 Crore as show below Gold 140 Crore + Dollars 60 Crore Issue Currency Rs 200 Cr 150 Crore 50 Crore Vault (locker) Public What is Liability and Assets in Books of RBI BALANCE SHEET OF RBI Currency Held by Public Vault Cash held by Commercial banks