Question

The note of ten rupees is written - 'I promise to pay ten rupees to the holder. ' What does this mean ?

Answer 1

 I Promise to pay....is printed on the currency note just to ensure that the RBI has reserved the gold equal to the value of printed currency. This promissory note ensures to the note holder that the RBI can’t be defaulter in any case/situation (Civil war, world war or any natural calamity, depression or hyperinflation inflation etc). If somebody holds 100 rupee currency note then he/she need not to worry about its exchange value because in any situation the RBI is liable to pay him gold/goods equal to the value of the 100 rupee.


This is written because:-

. To increase the faith of the Indian currency holder (Indian or foreigner) in the currency of the country. For foreign holders, RBI maintains foreign currency worth 85 cr.

2. The promissory note written on the currency note ensures to the currency holder that the note is the legal tender in the country and the recipient of the currency note does not carry any risk in holding the currency.

3. The “Promissory Note” written on the note is the unconditional promise in writing by the Central Bank of the country that it is liable to pay the written amount to the currency holder.

4. If the declaration or “Promissory Note” of the RBI Governor is not written on the currency then the foreign people may hesitate in accepting the note because they may not be sure about the exchange value of the currency note in the future.