It is customary in the recent times that banking examinations are reliant on passages on economic and social issues, business and finance, banking etc taken from famous newspapers such as The Hindu, The Economic Times, The Business Standard, The Business Line, The Times of India etc. We, the banking team of Jagranjosh.com, are presenting to you a passage for Reading Comprehension taken from The ‘Business Standard’ (dated October 18th, 2016). This will help you a lot in your preparation for the upcoming examinations.
Question (1-10): Read the following passage and answer the questions that follow. Some words / phrases are printed in bold in order to help you locate them while answering some of the questions
The Reserve Bank of India's task of issuing, managing and distributing currency notes and coins is a meticulous one that involves a great deal of co-ordination and calls for a high level of security procedures, among other things. A small lax anywhere in the currency supply chain could lead to mishaps of the kind that took place on Tuesday, when cash was stolen from the Chennai-bound Salem Express carrying about Rs 342 crore.
Paper currency was first issued during British East India Company rule. The first paper notes were issued by the private banks such as Bank of Hindustan and the presidency banks during late 18th century. Via the Paper Currency Act of 1861, the British Government of India was conferred the monopoly to issue paper notes in India.
At present, notes in India are issued in the denomination of Rs 5, Rs 10, Rs 20, Rs 50, Rs 100, Rs 500 and Rs 1,000. These notes are called bank notes, as they are issued by the Reserve Bank of India. The printing of notes in the denominations of one rupee and Rs 2 has been discontinued as these denominations have been coinized. However, such notes issued earlier are still in circulation. The printing of notes in the denomination of Rs 5 had also been discontinued; however, it has been decided to reintroduce these notes so as to meet the gap between the demand and supply of coins in this denomination.
The Reserve Bank manages currency in India. The Government, on the advice of the Reserve Bank, decides on the various denominations. The RBI also co-ordinates with the Government in the designing of bank notes, including the security features. It estimates the quantity of notes that are likely to be needed denomination-wise and places the indent with the various presses through the Government of India. The notes received from the presses are issued and a reserve stock maintained. Notes received from banks and currency chests are examined. Notes fit for circulation are reissued and the others (soiled and mutilated) are destroyed so as to maintain the quality of notes in circulation. The Reserve Bank derives its role in currency management on the basis of the Reserve Bank of India Act, 1934.
RBI manages the currency operations through its offices located at Ahmedabad, Bangalore, Bhopal, Bhubaneshwar, Belapur (Navi Mumbai), Kolkata, Chandigarh, Chennai, Guwahati, Hyderabad, Jaipur, Kanpur, Lucknow, Mumbai (Fort), Nagpur, New Delhi, Patna and Thiruvananthapuram. These offices receive fresh notes from the note presses. Similarly, the Reserve Bank offices located at Kolkata, Hyderabad, Mumbai and New Delhi initially receive the coins from the mints. These offices then send them to the other offices of the Reserve Bank. The notes and rupee coins are stocked at the currency chests and small coins at the small coin depots. The bank branches receive the bank notes and coins from the currency chests and small coin depots for further distribution among the public.
To facilitate the distribution of notes and rupee coins, the Reserve Bank has authorized selected branches of banks to establish currency chests. These are actually storehouses where bank notes and rupee coins are stocked on behalf of the Reserve Bank. At present, there are over 4,422currency chests. The currency chest branches are expected to distribute notes and rupee coins to other bank branches in their area of operation.
RBI is located only in 18 places for currency operations. Distribution of notes and coins throughout the country is done through designated bank branches, called chests. A chest is a receptacle in a commercial bank to store notes and coins on behalf of the Reserve Bank. Deposit into chest leads to credit of the commercial bank’s account and withdrawal leads to debit.
Some bank branches are also authorized to establish small coin depots to stock small coins. There are 3,784 small coin depots spread throughout the country. The small coin depots also distribute small coins to other bank branches in their area of operation.
Specially built trucks for short distance (journey completed during the day), railways for long distance Guarded by police, remittance accompanied by officials of RBI to chests. Further movement from chest to a branch done by the bank concerned
Size of the country and volume of currency, security and availability of railway wagons when required, political boundaries defining jurisdiction of Issue Offices lead to sub-optimal logistics, cross movement of currency is unavoidable, cross movement of currency, security- police is preoccupied with other activities of priority, private security is unavailable and not favored, transport through railways involves enormous coordination of logistics and privatization of transport – introduced recently in respect of coins only.
1. Why, according to the passage, has the RBI stopped circulating notes of certain denominations?
Solution: Option (3)
Explanation: The RBI has stopped printing currency notes for Re 1, Rs 2 and Rs 5 because all of these denominations are already in coins and people use coins in order to use these denominations. At the same time, the notes already in circulation still continue to be legal tenders and they can be used by the general public.
2. Why is the RBI mulling over re-introducing Rs 5 notes in the future, according to the information given in the passage?
Solution: Option (2)
Explanation: According to the passage, the RBI is thinking of issuing currency notes to the denomination of Rs 5 because the number of coins in circulation is not enough to meet the actual demand of these coins. This makes RBI think that it should re-introduce the Rs 5 currency notes again in the future.
3. Which among the following is / are true regarding issuing of currency notes in India?
Solution: Option (3)
Explanation: According to the information given in the passage, the currency notes were first issued in India by the British East India Company and these notes were mainly issued by private banks such as Bank of Hindustan and other state presidency banks in the 18th century. Later via the Paper Currency Act of 1861, the British were given the exclusive rights to issue paper currency notes in India.
4. How does RBI manage the inadequacy of number of offices across the country regarding circulation of currency notes and coins?
Solution: Option (5)
Explanation: Though RBI has only 18 offices in the country, it uses the vast network of commercial banks in order to issue currency notes and coins it receives as these banks act as chests to become the stock holder of currency notes and coins. General public can approach these banks and get fresh currency notes and coins.
5. Which among the following is / are true according to the information given in the passage?
Solution: Option (2)
Explanation: According to the information given in the passage, RBI decides on the number of notes to be printed based on its consultation with the government of India and at the same time, it uses a number of issues to decide on this like the number of soiled or mutilated notes in circulation, the actual demand in the economy etc. The design of the notes is also decided both by RBI and the Central Government. This makes only option (2) right among the given options.
6. Which among the following is / are true regarding currency chests used by RBI in the country according to the information given in the passage?
Solution: Option (2)
Explanation: Currency Chests are used by the RBI in order to ensure proper circulation of paper currency and coins in the country as it does not have the adequate number of human resources to do so. There are 4422 currency chests in India at present and they are managed by RBI. These chests are basically bank branches authorized by the RBI to act as store houses of currency notes and coins to be distributed among the general public as and when necessary.
7. Which among the following is similar in meaning to the word ‘lax’ as used in the passage?
Solution: Option (4)
Explanation: The given word in the passage has been used to indicate that there will be problems if there is any kind of negligence in the task of circulating currency notes and coins by RBI across the country. This makes option (4) the right choice among the given options.
8. Which among the following is similar in meaning to the word ‘enormous’ as used in the passage?
Solution: Option (2)
Explanation: According to the given passage, the word means that there has to be extensive coordination between the railways, police force, RBI and bank branches etc in case of circulation of currency notes and coins across various locations in the country. This makes option (2) the right choice among the given options.
9. Which among the following is opposite in meaning to the word ‘meticulous’ as used in the passage?
Solution: Option (1)
Explanation: According to the given passage, the word has been used to imply that the task of circulation of currency notes and coins is a very carefully done job and it requires a lot of coordination. This makes option (1) as the opposite as it means that no care is required to do a job.
10. Which among the following is opposite in meaning to the word ‘monopoly’ as used in the passage?
Solution: Option (5)
Explanation: According to the given passage, the authority to print currency notes and issue coins has not been distributed among anybody other than the British East India Company during the period when these notes were first issued in the country. This makes option (5) the right choice among the given options as the opposite of the given word as used in the passage.