CENTRAL BANKING FUNCTIONSCentral

Section 28A of The Reserve Bank of India Act, 1934

1[28A. Issue of special bank notes and special one rupee notes in certain cases.--(1) For the purpose of controlling the circulation of bank notes without India, the Bank may, notwithstanding anything contained in any other provision of this Act, issue bank notes of such design, form and material as may be approved under sub-section (3) (hereinafter in this section referred to as special bank notes) of the denominational values of five rupees, ten rupees and one hundred rupees.

(2)For the purpose of controlling the circulation of Government of India one rupee notes without India, the Central Government may, notwithstanding anything contained in any other provision of this Act or in the Currency Ordinance, 1940 (Ord. 4 of 1940) issue Government of India notes of the denominational value of one rupee of such design, form and material as may be adopted under subsection (3) (hereinafter in this section referred to as special one rupee notes).
(3)The design, form and material of the special bank notes shall be such as may be approved by the Central Government after consideration of the recommendations made by the Governor and of the special one rupee notes shall be such as the Central Government may think fit to adopt.
(4)Neither the special bank notes not the special one rupee notes shall be legal tender in India.
(5)The special one rupee note shall be deemed to be included in the expression "rupee coin" for all the purposes of this Act except section 39, but shall be deemed not to be a currency note for any of the purposes of this Act.
(6)Where a special bank note is on its face expressed to be payable at a specified office or branch of the Bank, the obligation imposed by section 39 shall be only on the specified office or branch and, further, shall be subject to such regulations as may be made under this section.
(7)The Bank may, with the previous sanction of the Central Government, make regulations to provide for all matters for which provision is necessary or convenient for the purpose of giving effect to the provisions of this section, and, in particular, the manner in which, and the conditions or limitations subject to which--
1. (i)bank notes and one rupee notes in circulation in any country outside India may be replaced by special notes issued under this section;
2. (ii)any such special notes may be exchanged for any other bank notes or one rupee notes.

Summary

The Bank has the power to issue special notes to control currency use outside of India.
The Central Government can also issue special one rupee notes for use in foreign territories.
These special versions of notes are not legal tender and cannot be used for payments within India.
A special one rupee note is treated as a rupee coin for most legal purposes under the law.
The Bank can create rules for replacing or exchanging these special notes for regular Indian currency.

Practical examples

1Anil is traveling to a specific foreign territory where India has authorized special currency use. He goes to a designated branch to exchange his regular 100 rupee notes for special 100 rupee notes that have a unique design intended only for that region.

2Sunita finds a special one rupee note in her old collection. She tries to buy a candy bar at a shop in Delhi, but the shopkeeper refuses it because the law states these special versions are not valid for payment inside India.

FAQ

1. Are the special notes mentioned in Section 28A of The Reserve Bank of India Act, 1934 valid for shopping in India?

No, Section 28A of the Act states that neither the special bank notes nor the special one rupee notes are legal tender inside India.

2. Which denominations can be issued as special bank notes under Section 28A of The Reserve Bank of India Act, 1934?

Under Section 28A of the Act, the Bank can issue special notes in values of five rupees, ten rupees, and one hundred rupees.

3. Who decides the design of the special one rupee notes under Section 28A of The Reserve Bank of India Act, 1934?

According to Section 28A of the Act, the Central Government adopts the design, form, and material it thinks fit for the special one rupee notes.

Test yourself

Q1.Under Section 28A of The Reserve Bank of India Act, 1934, what is the primary purpose of issuing special bank notes?

Q2.Which official makes recommendations for the design of special bank notes under Section 28A of The Reserve Bank of India Act, 1934?

Q3.Under Section 28A of The Reserve Bank of India Act, 1934, which denomination is NOT listed as a possible special bank note?

Q4.Does a special one rupee note count as a "rupee coin" according to Section 28A of The Reserve Bank of India Act, 1934?

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