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The lesson cites the Paper Currency Act, 1861 as a key historical milestone in note-issue. What did the Paper Currency Act, 1861 confer on the Government of India, and what practice did it end?
Answer & Solution
Correct answer: B.
1. The Paper Currency Act, 1861 is treated as the foundational note-issue statute.
2. It conferred upon the GoI the monopoly of issuing notes.
3. The Act ended the earlier practice of private and presidency banks issuing currency in India.
4. Between 1861 and 1935 the GoI managed the issue of paper currency; the RBI took it over in 1935.
_Source: ICSI CS Executive Paper 7 (Economic, Business and Commercial Laws) — Lesson 1: Reserve Bank of India Act, 1934, pp. 8-21._
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