Before the New Year, the RBI made an important decision. The RBI can issue new coins and notes in India. When the RBI asks the central government to print notes or coins, it happens in two steps. The central government, with help from RBI officials and experts, makes the final decision. Then RBI can issue the coins or notes. The same process is used to stop a coin or note.
India has seen many cases where coins and notes were stopped. In 2016, the 500 and 1000 rupee notes were stopped. Last year, RBI stopped the 2000 rupee note. Now, media reports say the RBI has made a similar decision about the 5 rupee coin.
Are 5 Rupee Coins Being Discontinued?
Indian currency uses both coins and notes. Notes of 100, 200, and 500 rupees and coins of 5, 10, and 20 rupees are still in use. But in recent years, 5 rupee coins are slowly disappearing. Earlier, the 5 rupee coin was thick, but now it is being replaced by a thin golden 5 rupee coin.
If a 5 rupee coin weighs more than 9 grams, the RBI may reduce or stop printing it.
Why Has RBI Discontinued the Old Coins?
The thick 5 rupee coins were discontinued because the metal in them could be melted to make four to five blades, which cost more than 5 rupees. If the cost of making or using a coin is more than its face value, the government and RBI remove it from circulation.
For example, if someone melts a 5 rupee coin and makes five blades, they can sell them for 2 rupees each and earn 10 rupees. This makes the coin’s metal value higher than its monetary value. This is why the RBI stopped making thick 5 rupee coins.