Money and Financial Inclusion — From Barter to UPI, and What Demonetisation Actually Did

Why Money Exists, and Who Issues It

Before money, exchange needed a double coincidence of wants: you had rice, wanted cloth, and had to find someone with cloth who happened to want rice. Barter also had no way to store value and no common yardstick to price things against one another.

Money fixes all of that, and exams test the fix as four functions:

1. 1.Medium of exchange
2. 2.Unit of account (measure of value)
3. 3.Store of value
4. 4.Standard of deferred payment — this last one is what makes credit and instalments possible

Indian currency is fiat money: a ₹500 note is worth ₹500 because law says so, not because of the paper.

Who issues what is the single most-asked fact here. The RBI issues every banknote of ₹2 and above under Section 22 of the RBI Act, signed by the Governor. The Government of India issues all coins and the ₹1 note, signed by the Finance Secretary. Since 1957 the RBI runs a Minimum Reserve System — at least ₹200 crore of reserves, of which ₹115 crore must be gold.

1. Which of the following is NOT one of the four functions of money?

2. In India, the ₹1 note is issued by —

3. In Indian money-supply statistics, "broad money" refers to —

4. UPI, India's real-time payment interface, is built and operated by —

5. The demonetisation of ₹500 and ₹1,000 notes was announced on —

6. A payments bank in India is permitted to —

7. Which money-transfer system has a MINIMUM transaction value rather than a maximum?

8. The SHG–Bank Linkage Programme, India's largest channel of group microcredit, was launched by —