The correct answer is Minimum reserve system.
Key Points
India Currency System:
- In terms of section 22 of the reserve bank of india act, the RBI has been given the statutory function of notes issue on a monopoly basis.
- The note issue in india was originally based upon the " Proportional Reserve System ".
- When it becomes difficult to maintain the re-serve proportionately.
- It was replaced by " Minimum Reserve Systems ".
- According to the RBI amendment act of 1957, the bank should now maintain a minimum reserve of Rs.200 crore worth of gold coins.
- The gold bullion and foreign securities of which the value of gold coin and bullion should be not less than Rs.115 crore.
