Sections 24 and 25 of the Reserve Bank of India Act, 1934 - Denominations and Form of Bank Notes

Sections 24 and 25 regulate two fundamental aspects of Reserve Bank of India bank notes. Section 24 specifies the denominations in which bank notes may be issued and permits the Central Government, on the recommendation of the Central Board, to provide for other denominations within the statutory ceiling or to stop issuing specified denominations. Section 25 governs approval of the design, form and material of bank notes.

Section 24 - Denominations of bank notes

Section 24(1): Subject to subsection (2), bank notes may have denominational values of two rupees, five rupees, ten rupees, twenty rupees, fifty rupees, one hundred rupees, five hundred rupees, one thousand rupees, five thousand rupees and ten thousand rupees. The Central Government may also, on the recommendation of the Central Board, specify other denominational values not exceeding ten thousand rupees.

The section sets the statutory denomination framework. The fact that a denomination appears in Section 24 does not by itself mean that bank notes of that denomination are currently being issued or are presently in circulation. Subsection (2) expressly permits non-issue or discontinuance of specified denominations.

Maximum denomination under Section 24

For a denomination specified under the residual power in Section 24(1), the statutory ceiling is ten thousand rupees. Any other denominational value specified by the Central Government under this provision must therefore not exceed that amount and must follow a recommendation of the Central Board.

Section 24(2) - Non-issue or discontinuance of a denomination

The Central Government may, on the recommendation of the Central Board, direct the non-issue or discontinuance of issue of bank notes of any denominational value specified by it.

Non-issue means a denomination is not to be issued, while discontinuance of issue means further issue of the specified denomination may be stopped. This power explains why the denominations expressly listed in subsection (1) should not be read as a list of notes necessarily being printed or issued at any particular time.

Does discontinuance of issue automatically end legal tender status?

No. Section 24 concerns denominations and the issue or discontinuance of issue of bank notes. The separate question whether a series of bank notes ceases to be legal tender is governed by Section 26 and other applicable law. The concepts should therefore not be treated as legally identical.

Section 25 - Form of bank notes

The design, form and material of bank notes must be such as may be approved by the Central Government after consideration of the recommendations made by the Central Board.

Section 25 divides the statutory process between recommendation and approval. The Central Board makes recommendations concerning the design, form and material of bank notes, and the Central Government considers those recommendations before granting approval.

Meaning of design, form and material

Design: concerns the visual and security-related design characteristics of a bank note.
Form: concerns the approved physical presentation and format of the bank note.
Material: concerns the substance or medium from which the bank note is made.

These descriptions explain the ordinary legal operation of the terms. The detailed technical specifications and security features of currency are governed through the competent authorities and are not set out exhaustively in Section 25 itself.

Digital bank notes and Section 22A

Current statutory context: Section 22A provides that Sections 24 and 25, among certain other provisions, do not apply to bank notes issued in digital form by RBI. Sections 24 and 25 therefore govern the statutory framework for bank notes to which those provisions apply, while digital bank notes are expressly excluded from them by Section 22A.

Relationship with Sections 22, 23 and 26

Section 22 gives RBI the sole right to issue bank notes in India, and Section 23 requires the issue of bank notes to be conducted through the separate Issue Department. Section 24 then regulates permitted denominations, Section 25 regulates their design, form and material, and Section 26 deals with their legal-tender character.

Key legal points under Sections 24 and 25

Specified denominations: Section 24(1) lists statutory denominations from two rupees up to ten thousand rupees.
Other denominations: the Central Government may specify another denomination, on the recommendation of the Central Board, but it cannot exceed ten thousand rupees.
Issue may be stopped: Section 24(2) authorises non-issue or discontinuance of issue of specified denominations on the Central Board's recommendation.
Issue status is distinct from legal tender: stopping further issue does not, by Section 24 alone, amount to withdrawal of legal-tender status.
Government approval: the design, form and material of bank notes require Central Government approval after consideration of the Central Board's recommendations.
Digital bank notes: Section 22A expressly makes Sections 24 and 25 inapplicable to bank notes issued in digital form.

Official legal sources: See the India Code consolidated Reserve Bank of India Act, 1934, the Reserve Bank of India, and the Department of Financial Services.