Money: Barter to Bitcoins UPSC Prelims Notes PDF
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2024
Mrunal
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Summary
This document is a study guide for the UPSC Prelims exam, focusing on the concept of money, from barter systems to bitcoins. It includes topics like the evolution of money, different types of money, demonetization, and digital payment systems like UPI.
Full Transcript
Mrunal’s Economy for UPSC Prelims-2024-25 (PCB11-RAFTAAR) Pillar1A1: Money: Barter to Bitcoins Table of Contents 10 🏛Brief Info about Economy course (PCB11-Raftaar)......................................................................4 10.2 Myths abou...
Mrunal’s Economy for UPSC Prelims-2024-25 (PCB11-RAFTAAR) Pillar1A1: Money: Barter to Bitcoins Table of Contents 10 🏛Brief Info about Economy course (PCB11-Raftaar)......................................................................4 10.2 Myths about Economy for UPSC Prelims.................................................................................................4 10.3 🏛💳 PYQ Analysis: Increased diversity in Economy topics in Prelims.................................................5 10.3.1 🏛💳 PYQ Analysis: Marks Distribution in UPSC Prelims and Mains..................................................................8 10.4 🍅🌽 Barter system & its disadvantages: (वस्तु विनिमय प्रणाली)..................................................................9 10.5 📏Money: Functions of (पैसे के कार्य)...........................................................................................................9 10.6 💵 Money: Evolution & Types (मुद्रा की उत्क्रांति व् प्रकार)............................................................................10 10.6.1 🥜Commodity Money / (Intrinsic value: वस्तु मुद्रा ? Yes).......................................................................10 अंतर्भूत मूल्य 10.6.2 🥇Metallic Money / (Intrinsic value? Yes).................................................................................................10 धातु मुद्रा 10.6.3 💪Metallic Money → Full Bodied vs Token Coins....................................................................................................10 10.6.4 💍📔Intrinsic value of a coin? ( )..............................................................................................................11 अंतर्भूत मूल्य 10.6.5 💵Paper Money / (Intrinsic Value? No).................................................................................................11 कागजी मुद्रा 10.6.6 💵⚖️Legal Tender ( )............................................................................................................................11 वैधानिक निविदा 10.6.7 💵⚖️Legal Tender ( )- Limited and Unlimited..................................................................................13 वैधानिक निविदा 10.6.8 👩🦯🤳🏻RBI’s App to help the blind identify currency notes.....................................................................................14 10.6.9 💵 Currency related General Knowledge:................................................................................................................14 10.6.10 💵 “I promise to pay the bearer…”: Meaning of this promise?..........................................................................15 10.6.11 Currency Note is not a promissory note?..............................................................................................................15 10.7 💵 Demonetization of Fiat Money (विमुद्रीकरण: Previously 1946, 1978).................................................15 10.8 💵 ₹2000 WITHDRAWN but continued as legal tender........................................................................16 10.8.1 💵 ₹2000 NOT DEMONETIZED but WITHDRAWN from circulation............................................................16 10.8.2 💵 ₹ 2000 withdrawn- WHY? ( )..............................................................................................16 क्यों चलन से हटाया गया 10.8.3 💰🤮 Money Types: Gresham law: good vs bad money | soft vs hard currency.................................................17 10.8.4 Zimbabwe's Gold Coin ‘Mosi-oa-Tunya’.................................................................................................................17 10.8.5 🤫💸👜🥚 Redenomination: Iran’s Toman Currency...........................................................................................17 10.9 🐷🔖Bank Money / Deposit Money.........................................................................................................17 10.9.1 🐷🔖 Paper orders: Cheque, Demand Draft (DD)..................................................................................................17 🔖 10.9.2 DD and Overdraft..................................................................................................................................................18 🔖🐷 10.9.3 Cheque → NPCi’s Cheque Truncation System (CTS) & Positive Pay Mechanism..........................................18 10.10 🐷💸📡 Electronic Orders / Digital payment........................................................................................19 10.10.1 💸📡CBS ( full form: Core Banking Solution /system)........................................................................................19 10.10.2 📡 NEFT vs RTGS vs IMPS.....................................................................................................................................19 10.10.3 📡 LPSS- lightweight payment and settlement system.........................................................................................21 10.10.4 💸📡 RBI’s Next Generation Treasury Application (NGTA), 2020-Oct...........................................................21 10.10.5 📡🚩👶🏻 RBI's Next-Gen RTGS to comply with ISO-XML standards................................................................21 10.11 🕵🏻 National Payment Corporation of India(NPCi)..............................................................................22 (Batch:PCB11-RAFTAAR-ONLY-Prelims) Mrunal’s Economy Pillar#1A1 Money: Barter to Bitcoins → Page 1 10.12 🕵🏻 🤳NPCI → UPI (Unified Payment Interface).................................................................................22 🛍️ 10.12.1 UPI: daily transaction limits..............................................................................................................................23 🤌 10.12.2 UPI: Push vs Pull Transactions..........................................................................................................................23 10.12.3 → →NPCI → UPI → 123PAY for FeaturePhones.............................................................................................24 🛍️ 📙 10.12.4 UPI observations by Economic Survey-ES-2023........................................................................................24 🛍️ 10.12.5 UPI single-block-and-multiple-debits functionality (2022-Dec)..................................................................25 🛍️ 10.12.6 UPI-Lite (on-device wallet)...............................................................................................................................25 10.12.7 🛍️🫰🏻 UPI-Lite + NFC = Offline Retail Payment / Tap-and-pay.........................................................................25 10.12.8 🛍️💬 Conversational payments in UPI..................................................................................................................26 10.13 🔪 Pre-sanctioned credit line.................................................................................................................26 10.13.1 🔪🛍️ UPI: Pre-sanctioned credit line/Overdraft in UPI (2023-Apr).................................................................26 10.13.2 🔪🛍️ UPI: Benefits of UPI-overdraft facility?.......................................................................................................27 10.13.3 🛍️ UPI: Interoperable Card-less Cash Withdrawal (ICCW)...............................................................................27 10.13.4 🛍️ UPI: QR Code based Coin Vending Machine using UPI (2023-Feb)...........................................................27 10.13.5 🕵🏻 🤳NPCI → UPI BHIM Full form: Bharat Interface for Money (2016)........................................................28 10.14 🕵🏻 💳 NPCI → Rupay Card Payment Gateway (2012).........................................................................28 10.14.1 🕵🏻 NPCI other notable initiatives...........................................................................................................................29 10.14.2 🕵🏻NACH-ABPS : Hybrid / Mixed mode in MGNREGA.....................................................................................29 10.15 🤳🏻💸👟 Direct Benefit Transfer (DBT) → E-Rupi by NPCi (2021)....................................................30 10.15.1 e-RUPI vouchers: scope expanded (2023-June)...................................................................................................31 10.15.2 💸🤳🏻🤷🏻♂️🤳🏻Interoperability Problem ( इंटरऑपरेबिलिटी)............................................................................................31 10.16 🤳🏻💸QR Codes: compulsory to implement UPI/Bharat QR from 2022..............................................31 10.16.1 🤳🏻💸rMQR (Rectangular Micro QR Code)...........................................................................................................32 10.16.2 💳 Card Types based on Security Features: ( )................................................32 सुरक्षा प्रणाली के हिसाब से कार्ड के प्रकार 10.17 💳 Credit & Debit Cards (also called ‘Plastic Money’).........................................................................33 10.17.1 💳 📧 Card Tokenization (from 1/Oct/2022).......................................................................................................34 10.17.2 💳 CVC Less transactions........................................................................................................................................34 10.17.3 💳 Auto-Debit/E-mandates and Additional Factor of Authentication (AFA).................................................35 10.18 💳 🚕 Card/tech for Transport / Travel.................................................................................................35 10.18.1 💳 🚕 National Common Mobility Card (NCMC, 2019)....................................................................................35 10.18.2 🚝💳 SBI’s Nation First Transit Card (2023)........................................................................................................36 10.18.3 💳 🚕 FASTag for paying toll fees at highways (2017).........................................................................................36 10.19 💳 MDR: Full form: Merchant Discount Rate (व्यापारिक छू ट दर)...........................................................36 10.19.1 💳 MDR Subsidy by MEITY....................................................................................................................................37 10.20 Interchange fee by NPCi (2023-March).................................................................................................38 10.20.1 💳 🏧 ATM and its Types........................................................................................................................................38 10.21 💸📡🤳🏻 📈 Measures to promote Cashless Economy...........................................................................39 10.21.1 🕵️♂️ 💳📯 Payments Infrastructure Development Fund (PIDF) by RBI..............................................................39 10.22 🌐🤝Global Money Transfer..................................................................................................................39 10.22.1 UPI facility to foreign tourists coming to India (2023)........................................................................................39 10.22.2 Nostro-Vostro / Rupee-Ruble / Rupee-Rial Agreement?....................................................................................40 💳 10.22.3 RUPAY Cards- International acceptance.........................................................................................................40 (Batch:PCB11-RAFTAAR-ONLY-Prelims) Mrunal’s Economy Pillar#1A1 Money: Barter to Bitcoins → Page 2 10.22.4 🛍️ UPI in Srilanka, Mauritius (2024).....................................................................................................................40 10.22.5 🛍️ India-UAE: LCSS: UPI-IPP linkage (2023-Aug).............................................................................................40 10.22.6 💸📞Financial Messaging Systems: SWIFT- Russia gets banned.......................................................................41 10.23 👨⚖️📜🗓 Payment System Operators?....................................................................................................41 10.23.1 👨⚖️New Umbrella Entity (NUE) for Retail Payments System (2019).................................................................42 10.23.2 🤳🏻 Third Party Application Providers (TPAPs): Google Pay, Whatsapp Pay...................................................42 10.24 🕵️♂️ 💳 Digital Payment Regulatory bodies (नियंत्रण संस्थाएँ )...................................................................43 10.24.1 🕵️♂️ 💳 Digital Transactions Ombudsman (DTO-2019).......................................................................................43 10.24.2 🕵️♂️ RBI: BPSS (Statutory body)................................................................................................................................43 10.24.3 🕵️♂️Payment Regulatory Board (PRB)......................................................................................................................44 10.25 🐯📊 Digital Payment related Index / Competitions/Reports by RBI.................................................44 10.26 🔗💮 Crypto-Currency & Blockchain Technology...............................................................................44 10.26.1 👝Hot Wallet vs Cold Wallet..................................................................................................................................44 10.26.2 🔗💮📉:🥶☃️Crypto-Winter in Bitcoin Prices ( ).........................................................45 भाव गिरा अब उठ नहि रहा है 10.26.3 🔗💮📉:🥶☃️ Crypto-scams - Recent Global Scams...........................................................................................45 10.26.4 🔗💮:Crypto currency observations by 📙EcoSurvey’23.....................................................................................46 10.26.5 🔗💮:🍋 Cryptocurrency Profit pe 30% Tax and 1% TDS in 👜🥻Budget-2022..............................................46 10.27 ⚖️🔗💮✋ Cryptocurrency Banned in other nations?..........................................................................46 10.27.1 Crypto currencies as legal tender is in some countries........................................................................................46 10.27.2 🔗💮 🤩 : Cryptocurrency Permitted in Other Nations/Groups..........................................................................47 10.28 🔗💮🥇 Cryptocurrency → global regulations.......................................................................................47 10.28.1 Global Regulations → MICA regulation by EU (2023).......................................................................................47 10.28.2 Global Regulations → CARF Framework by OECD (2022)...............................................................................47 10.28.3 🔗💮🥇 Cryptocurrency → Stable-coins..............................................................................................................48 10.28.4 World Coin Project (2021–22)................................................................................................................................48 10.29 🐯🔗💮 Central Bank Digital Currency (CBDC)..................................................................................48 10.29.1 🚩👶🏻 Zhande-walle Babushono ke liye special instruction: ( )..........................................................49 अग्रिम सूचना 10.29.2 💮 Indian CBDC symbol (e₹)..................................................................................................................................49 10.29.3 💮 (e₹) CBDC wholesale vs Retail..........................................................................................................................49 10.29.4 💮(e₹) Indian CBDC = digital token of legal tender............................................................................................50 10.29.5 💮 (e₹) → Settlement finality..................................................................................................................................50 10.29.6 💮(e₹) Indian CBDC = no interest earning ( ).............................................................................50 नहीं मिलेगा ब्याज। 10.29.7 💮 📲 (e₹) CBDC - Interoperability permitted with UPI QR Codes..................................................................51 10.29.8 💮(e₹) CBDC - programability & offline features.................................................................................................51 10.29.9 E-Rupee vs E-Rupi....................................................................................................................................................52 10.29.10 🐯🔗💮=👌🥰Benefits of CBDC ( कें द्रीय बैंक डिजिटल मुद्रा के फायदे).........................................................................52 10.29.11 🐯🔗💮= ✋🥵Challenges of CBDC ( चुनौतियां)...................................................................................................52 10.30 💠≠ ❇️ Fungibility?................................................................................................................................53 10.30.1 💮(e₹): Fungibility of CBDC...................................................................................................................................53 10.30.2 💠 Non-fungible token (NFT: - ).....................................................................................................54 ग़ैर फ़ं जीबल टोकन 10.30.3 💠🤩NFT-Charms? ( )...................................................................................................................................55 आकर्षण 10.30.4 💠😰NFT-Challenges: ( ).............................................................................................................................55 चुनौतियां (Batch:PCB11-RAFTAAR-ONLY-Prelims) Mrunal’s Economy Pillar#1A1 Money: Barter to Bitcoins → Page 3 10.30.5 ✍️ Mains Answer Writing.......................................................................................................................................55 10 🏛B RIEF INFO ABOUT ECONOMY COURSE (PCB11-RAFTAAR) Covered in Area Comment, if any PCB11? Prelims ✅ Yes Yes- theory, current, NCERT, MCQ, PYQ- everything covered Separate course for it. You've Two Options: Mains ✋🚨No (A) Either wait for next Live course (QEP4) in Jun/July’24. (B) finish from Past Recorded Course (QEP3) Click Me. Micro Economics ✋🚨 No UPSC asked only 2 question in last 12 years. Finish from Recorded Course of 2023-May. Click Me - UPSC Syllabus, Strategy, Booklist, Cut-off: https://mrunal.org/syllabus - Economy: how much I’ll teach, what books do you’ve to read on your own etc. https://mrunal.org/pcb11 - Basically this PCB11-Raftaar Course deals only with Prelims-Specific Economy. - This is NOT Mains Economy. Not Microeconomics. (separate courses for it, u don’t have to pay extra, it’s part of your Netflix/Unacademy subscription). More explained in Lecture#1 - Only for serious competitive exam mindset candidates shd attend this. Timepass Babushone/ 🚩 Faaltu-ki-PHD krnewalle, harr baat pe Zhandaa-uthaane-walle (those with habit of making mountain out of molehills) should avoid my courses. - Old Students (PCB1to10) Need NOT Sit again. They shld see FREE UPDATEs [Win24] at Mrunal.org/win24 10.2 MYTHS ABOUT ECONOMY FOR UPSC PRELIMS (Batch:PCB11-RAFTAAR-ONLY-Prelims) Mrunal’s Economy Pillar#1A1 Money: Barter to Bitcoins → Page 4 I’m not making Memes for everything, otherwise pages will increase so just accept following: Myths Reality In Economy, ONLY concepts are important for UPSC. Both facts and concepts are asked. if something is not asked in the last 3 years, then such topic UPSC examiner asks trend- will never be asked. breaking questions. if some economy topic is older than one year, then it is not UPSC asked many Economy MCQs important. Only last one year current affairs is important. from events older than one year. We've to read economic-times, business line, etc newspapers. NOT required. 10.3 🏛💳 PYQ A NALYSIS: INCREASED DIVERSITY IN ECONOMY TOPICS IN PRELIMS From table given below, you can see that the diversity and variety of economy MCQs questions has increased/changed in recent Prelims, so it is inevitable that handouts will get lengthy. जब प्रश्नों की विविधता और जटिलता बढ़ रही है तो ये लाजमी है कि ज्यादा नोट्स लम्बे बनाने पड़ेंगे. So, please do not be fooled by the "negative-PR toolkit" circulated by Delhi-offline coaching mafia against my notes via timepass vloggers and bikaau-royal-entry toppers. Black background cell = NOTHING asked from said topic in that year. Economy Pillar 2023 2022 2021 2020 1A1_Digital CBDC & NFT ke features NOTHING Blockchain Payment & SWIFT asked Technology (Batch:PCB11-RAFTAAR-ONLY-Prelims) Mrunal’s Economy Pillar#1A1 Money: Barter to Bitcoins → Page 5 Economy Pillar 2023 2022 2021 2020 Bitcoin expansionis Money t monetary multiplier Central Banks policy increases when 1A2_Monetary globally hiking RBI responsible to multiplier If Indian Bond policy loan interest control inflation you Yield rates withdraw 1 influenced by 00 000 in what factors cash Lender of last District resort means Central 1B1_Classificati Credit rating what Cooperativ on Bank NBFC agencies UCBs e Banks regulation (DCCBs) 1B2_NPA/Bad Appointment Interest Loan Burning BBB of RBI Coverage Issues Governor Ratio InVITS pe Income Tax & SARFAESI Act Capital markets Call Money ke sub-markets IIB pe Income & other Stock Market: 1C_Sharemarke Beta in Tax instruments NDS-OM & t Sharemarket Convertible non- CDSL intangible Bonds financial investments debt Capital Expenditures of a company cyber 1D1_Insurance insurance Causal 1D2_Pension Workers get EPFO or not Kisan 1D3_ Financial SHG ko Loans Credit Card inclusion scheme 2B_FC 15th FC Vodafone indirect Black Money is Horizontal transfer bad why? (Batch:PCB11-RAFTAAR-ONLY-Prelims) Mrunal’s Economy Pillar#1A1 Money: Barter to Bitcoins → Page 6 Economy Pillar 2023 2022 2021 2020 BlackMoney Formula 2D_FRBM G-Sec and FRBM Deficit Household Docx Disinvestment Savings FDI Meaning India Switzerland import- Gold export 3A_BoP import Tea Board ka FDI types of export data India ka global export FDI/FPI Dubai Office instruments Indo- export data & SriLanka PLI Trade WTI Oil Contract NEER-REER “Gold currency Tranche” 3B_ currency RBI s exchange and RBI (Reserve Devaluation exchange Sterilization Action Tranche) ECB & Fed GFC- what Tapering NOT to do USA-EU Trade IMF Loan facility and technology 3C_intl.org G20 Common TRIMS Council agreements Framework Agreement EU s Stability AIIB-MTCR-SCO Growth Pact price of rice affected by Small Farmer public Large Field 4A_AGRO investment Nigerseed pe in agri MSP MSP All/ NEVER 4B_Mfg Services Videshi e- E-Commerce MSME & PSL commerce firms MSME IPR 4C_NITI PC Vietnam 1991 FYP; economy growth economic unemployment Organisation liberalizatio (Batch:PCB11-RAFTAAR-ONLY-Prelims) Mrunal’s Economy Pillar#1A1 Money: Barter to Bitcoins → Page 7 Economy Pillar 2023 2022 2021 2020 looking after n impact on industry dispute rural area Counter-cyclic real sector in the policy to 4D_GDP economy combat recession Demand-Pull inflation 4E_Inflation CPI vs WPI Printing money causes inflation Coal Controller s 5A_Infra- Organization Energy Water (CCO) 5B_Infra- Private Port etc Transport Infra Corridors 5C_Infra-Rural S3i ke Infra Sanitation MPLADS Urban sectors Coalition Janani 6A_HRD- Suraksha Yojna Ayushman Bharat Health Hunger Anaemia Mukt Digital Mission Malnutrition Bharat 7_Microeconom substitute & ics inferior goods TOTAL MCQ 20+ MCQ 20+ MCQ 14 MCQ 20+ MCQ Free Download Topicwise PYQ booklet at https://unacademy.com/content/upsc/downloads/ (free unlock code: Mrunal.org) For more, watch this youtube video: https://youtu.be/KTag3h_kJoE?si=fTsLxkizxivnFT4y Note on above table: Every teacher always wants to show that more number of questions are asked from his subjects. E.g. Economy teacher will say WTO = economy topic whereas IR teacher may disagree. No need to get into ‘emotional-fanboy-outrage’ around it. 10.3.1 🏛💳 PYQ Analysis: Marks Distribution in UPSC Prelims and Mains Prelims P1 (GS 100 🔠❓MCQs) Mains GSM-1-2-3 (750 Marks) 6 Pillars of Utility in exam 2023* economy 2021 2019 2020 2021 2022 2018 2019 2020 2022 2023 2018 💳1_Money 7 7 9 6 8 7 0 0 15 15 0 0 Most useful in Prelims but Banking, less in Mains Finance & (Batch:PCB11-RAFTAAR-ONLY-Prelims) Mrunal’s Economy Pillar#1A1 Money: Barter to Bitcoins → Page 8 Insurance 🍋2_Budget, Second lowest utility after FC, GST, 4 1 1 1 3 1 25 25 15 20 0 15 5_Infra FRBM 💱3_Intl_Tra 4 7 7 2 4 3 30 0 15 15 0 0 Third lowest utility after de, BoP 2_Budget. 🛒4_Sectors, GDP, Useful for both prelims and Inflation, 3 8 5 5 4 4 50 65 55 60 85 110 Mains. Microecono mics 🏗5_Infra 1 3 1 0 2 4 15 15 15 30 20 10 Lowest utility among 6 pillars. 👩🏻🎓6_HRD 6 2 0 0 0 2 60 75 85 45 20 95 More useful in Mains than Pre 25 28 23 14 21 21 180 180 200 185 125 230 Total --- Qs Qs Qs Qs Qs Qs m m m m m m 💸Economy Pillar #1-A1) Money: Barter to Bitcoin 10.4 🍅🌽 B ARTER SYSTEM & ITS DISADVANTAGES: (वस्तु विनिमय प्रणाली) Barter system was introduced by Mesopotamian tribes. It has following challenges: (चुनौतिया ) - 😰Double co-incidence of Wants (आवश्यकताओ का दोहरा सं योग नहीं होगा तो व्यापार असं भव). - 😰Search Cost & Transaction cost is high. (सही दाम पर चीज ढूँढने व लेनदेन की लागत बढ़ जाती है) - 😰Storage of perishable commodities is difficult, results in loss of value. (नाशवान वस्तुओ का मूल्यहास) - 😰Doesn’t encourage specialization and division of labour (श्रम विभाजन को प्रोत्साहित नहीं करता). 10.5 📏M ONEY: FUNCTIONS OF (पैसे के कार्य) Primary:2 functions[प्राथमिक] Secondary(S-T-D) 3functions [सहायक कार्य] Contingent 3functions [प्रासं गिक कार्य] 1. 📏Measure of Value: 1. 🐷🗳Store of Value (मूल्य का 1. Basis of credit system, gm=wt, ml=vol, सं चय) Financial markets (share, ₹=value (मूल्य का मापक). 2. 🚛Transfer of Value (मूल्य का bond etc.: More in 📑 Pillar#1C-sharemarket) वित्तीय 2. 🛒Medium of स्थानांतरण). Soldier in Kashmir to parents in Kanyakumari बाजार का आधार है पैसा ⏰ Exchange: Buy & Sell 2. Employing factor of goods and services 3. Deferred Payments (स्थगित production i.e. Land, Labour, using money as the भुगतानो का मानक). E.g. Buy (Batch:PCB11-RAFTAAR-ONLY-Prelims) Mrunal’s Economy Pillar#1A1 Money: Barter to Bitcoins → Page 9 Primary:2 functions[प्राथमिक] Secondary(S-T-D) 3functions [सहायक कार्य] Contingent 3functions [प्रासं गिक कार्य] ‘medium’. (विनिमय का माध्यम). iphone12 @₹3177 only per Capital (More in 📑 month x 36 months’ Equated Pillar#4C) उत्पादन के कारक जुटाने Monthly Installments (EMIs) में मदद करता है है पैसा = ₹1,14,372. Actual price is 3. Creation & Redistribution of ₹79,900, but ₹34,472 extra National Income via Interest.(ब्याज पर किश्तों में खरीदारी सं भव) 📑 taxation. ( Pillar#2) अमीरों पे ज्यादा कर वसूल के राष्ट्रीय आय के पुन:वितरण करने में मदद 10.6 💵M ONEY: EVOLUTION & TYPES (मुद्रा की उत्क्रांति व् प्रकार) Paper /Token / Commodity Metallic Bank Money, Representative / Crypto Currency Money Money Deposit Money Fiat Money 10.6.1 🥜Commodity Money / वस्तु मुद्रा (Intrinsic value: अंतर्भूत मूल्य? Yes) Iron Nails, Bear Pelts, Cocoa Beans, Whale Teeth, Gold Nuggets Problems? Perishable, not uniform, not pure, foreigners may not accept. नाशवान, एकसमान नहीं, शुद्ध नहीं, अस्वीकार भी कर सकते है. 10.6.2 🥇 Metallic Money / धातु मुद्रा (Intrinsic value? Yes) Traders & Kings stamped their marks on gold nuggets for uniformity & trust. (सोने पर अपना चिन्ह/छाप लगा देते – ताकि लोगों को उसकी शुद्धता पे यक़ीन हो) Indo Greek kings & Kushana kings issued gold coins, but Gupta Gold coins most spectacular- king is playing Veena, shooting animals, standing with wife.(इन राजाओने सोने के सिक्के निकाले थे) Delhi Sultanate Kings: Silver Tanka. Sher Shah Suri Rupiyah silver coin. Akbar: Muhr. 👩🏻🎓 Further SELF STUDY: History of Indian coins from History Lecture/Notes. 10.6.3 💪 Metallic Money → Full Bodied vs Token Coins Table 1: Types of Coins Gupta Coin: ~8 gm GOLD 50 paisa modern coin: ~4 gm steel 💪 Full Bodied Coins Token Coins (प्रतीककात्मक) Intrinsic Value (अंतर्भूत मूल्य) is Equal to or MORE LESS. (धातु एकदम सस्ती वाली इस्तेमाल करते हैं या बहुत ही कम than its Face Value (अंकित मूल्य) वजन की धातु इस्तेमाल करते हैं) Challenge? 1330s: Tughlaq's Token coin ⏬ Debasement: decreasing the amount of experimentation = #EPICFAIL (Why? metal in coins. Usually happens when Prepare in History subject). king’s rule gets weak/poor e.g. Aurangzeb, Modern Indian coins are token coins. (Batch:PCB11-RAFTAAR-ONLY-Prelims) Mrunal’s Economy Pillar#1A1 Money: Barter to Bitcoins → Page 10 Gupta Coin: ~8 gm GOLD 50 paisa modern coin: ~4 gm steel 💪 Full Bodied Coins Token Coins (प्रतीककात्मक) Roman Kings. सिक्के में धातु की मात्रा को कम किया Cupronickel metal used to discourage जाए तब लोगों का उस राजा के शासन से विश्वास कम होने melting. लगता है Coinage Act 2011 prohibits melting of coins. (सिक्का पिघलाना एक अपराध है) 10.6.4 💍📔Intrinsic value of a coin? (अंतर्भूत मूल्य) PRECIOUS METAL COINS (धातु के सिक्के ) PAPER CURRENCY (काग़ज़ी मुद्रा/नोट) Metal has INTRINSIC VALUE i.e. Metallic You can't use currency-note's paper as a money =Use it as "money", or you can melt the notebook or diary. metal → use that metal for making jewellery / So currency notes have no intrinsic value. (उसके weapons because metal itself has its value / कागज का उपयोगिता कु छ नहीं है, क्योकि उसपे छपाई कर दी है.) usages. (उस मुद्रा की धातु पिघला कर कु छ और चीजे भी बना सकते है. क्योकि धातु का अपना : अंतर्भूत मूल्य / उपयोगिता है.) 10.6.5 💵 Paper Money / कागजी मुद्रा (Intrinsic Value? No) Fiat money (वैधानिक मुद्रा): It MUST fulfil two conditions SIMULTANEOUSLY: दो शर्तों का एकसाथ पालन : 1. It MUST BE in the form of Physical Currency Coin / Physical Currency Notes / VirtualCoin/ DigitalCoin/ CryptoCoin which can measure value AND simultaneously और साथ ही साथ 2. It MUST BE issued by the order of a King / Queen / Government / Central Bank. Govt issues all coins upto ₹ 1,000, using powers of powers of Coinage Act 2011. Presently, govt issues Rs.50 paisa to Rs.20 coins. Rs.20 coin: 12-sided Polygon shape (Dodecagon आकार: बारह बाजुओ वाला चतुष्कोण है) ₹ 1 Note signed by Finance Secretary (वित्त सचिव) ₹ 1 note doesn’t contain “I promise to pay bearer…” RBI issues: Currency notes other than ₹ 1 Note under RBI Act 1934. Currency notes have Governor’s sign: “I promise to pay bearer…” 😤 FAQ: why is it like this!!!??? WHY CAN’T RBI ISSUE BOTH coins & currency notes!!? Ans. Send your suggestion to PM, to merge above two laws. Until it’s implemented, remember table for passing exam. प्रधानमंत्री को कागज लिखो- दोनों कानूनों का एकीकरण करने के लिए. जब तक वह नहीं होता तो इस handout को रटो। 10.6.6 💵⚖️ Legal Tender (वैधानिक निविदा) To become a ‘legal tender’, a given coin/currency MUST fulfil two conditions SIMULTANEOUSLY: एक साथ दो शर्तो को पूरा करना होगा. 1. It must be a FIAT MONEY (जो हमने ऊपर के सेक्शन में पढ़ा). AND SIMULTENOUSLY और साथ ही साथ (Batch:PCB11-RAFTAAR-ONLY-Prelims) Mrunal’s Economy Pillar#1A1 Money: Barter to Bitcoins → Page 11 2. It must be legally valid for all debts & transactions throughout the country. Other party can’t refuse to accept. (लेनदार उसको अस्वीकार नहीं कर सकता) Table 2: fiat money and legal tender in India A) Is it in form D) At present, is it E) Is it C) Result: Is it of a physical B) Is it issued by legally valid for LEGAL Fiat money? coin OR physical Central Bank / transaction in Tender in ITEM (YES If Both Note OR Digital Govt / King / India as per India (Yes, IF Cell A+B give C+D give Coin that can measure ‘value’? Queen ✅+✅) Coinage Act or RBI Act? ✅+✅) ₹ Indian Rupee: Coins & Notes, CBDC ✅ ✅ ✅ ✅ ✅ Demonetized (विमुद्रीकृ त) ₹500,₹1000 ✅ ✅ ✅ ✋ ✋ Dollar$, Yuan, Yen, Euro etc ✅ ✅ ✅ ✋ ✋ G-Sec, T-Bill (what is this-Ans. explained in video) ✋ ✅ ✋ ✋ ✋ Shares, Bonds, DD, Cheque, ATM, Cards, Kirana coin, Casino ✋ ✋ ✋ ✋ ✋ coin, Filmstar-Notes Marshall Island: SOV Venezuela: Petro coin ✅ ✅ ✅ ✋ ✋ Bitcoins ✅ ✋ ✋ ✋ ## ✋ Bitcoin is not a Fiat money, yet it is legal tender in El-Salvador nation. But it is an exception. ## (बिट-कोइन का अल-साल्वाडोर देश में वेधनिक निविदा होना के वल एक अपवाद है, वो पूरी दूनिया के लिए नियम/व्याख्या नहीं है।) Commemorative Coins = Fiat money yes but not legal tender unless notified by RBI/Government to be used as legal tenders. (स्मृतिचिन्ह रूप सिक्के - सामान्य भुगतान में इस्तेमाल नहि हो सकते, सिवाय के सरकार/आरबीआई उसकी अनुमति दे।) 😤 FAQ: we can use cheque / credit card to pay fees. So, why are they not fiat money/legal tender? (Batch:PCB11-RAFTAAR-ONLY-Prelims) Mrunal’s Economy Pillar#1A1 Money: Barter to Bitcoins → Page 12 😤 FAQ: I did not understand this thing and/or I want to engage in intellectual debate why “X” thing is legal tender? Ans. Please watch lecture’s recorded video again at 1X speed, more peacefully. 10.6.7 💵⚖️Legal Tender (वैधानिक निविदा)- Limited and Unlimited Table 3: Fiat Money: Two types of legal tenders A) 🚯Limited legal tenders B) ∞ Unlimited legal tenders: (सीमित वैधानिक निविदा) (असीमित वैधानिक निविदा) Recipient can refuse accepting payment beyond a No such restriction.** limit (एक हद से ज्यादा छू टटे पेसे स्वीकारने से सामने वाला मना कर सकता है) Coinage Act 2011 RBI Act 1934 - Section 26: Every bank Paper Note: Rs. 1 (एक रुपए की काग़ज़ी नोट) note is legal tender in India. Coins Rs. 1 / above → upto Rs.1000 They can be used for settling any amount Coins 50 paisa x 20 coins → upto Rs.10 of debt in India**, lender can’t refuse to Below 50 paisa coins are withdrawn (in 2011) accept it. ✋ So, 10 paisa, 25 paisa are not legal tenders. (10 पैसा और 25 पैसा वैधानिक निविदा नहीं है। 50 पैसा वैधानिक निविदा है) (Batch:PCB11-RAFTAAR-ONLY-Prelims) Mrunal’s Economy Pillar#1A1 Money: Barter to Bitcoins → Page 13 **Although in real life, Finance Act 2017: “Cash transactions for less than Rs.2 lakh only. Beyond that use Cheque, DD, NEFT etc. else penalty.” This rule is to discourage tax-evasion / black money. For more Ref: 📑Pillar#2. But for MCQs, simply accept that bank notes = unlimited legal tenders. हालांकि वास्तविक जीवन में काले धन / करचोरी को रोकने के लिए नगदी लेनदेन पर कु छ सीमा के बाद रोक है, किन्तु MCQ के लिए स्वीकार लो की 🚩👶🏻 FAQ# my shopkeeper doesn’t accept 50 paisa. Then how it is legal tender? मेरा दुकानदार नहीं लेता 50 पैसा का सिक्का। तो आप कै से कह सकते है वो वैधानिक निविदा है? Ans. as per RBI notification, 50 paisa is legal tender. So, accept it for MCQ & move to next topic. Further, feel free to file police case against shopkeeper, if you have plenty of free time/outrage for it. 🚩👶🏻 ₹1 one rupee paper note is limited legal tender or unlimited legal tender? Ans. Read above table carefully. it's given in it in the left column. 🔠❓MCQ: Which correctly describes the meaning of legal tender money? (Pre-2018) (a) The money which is tendered in courts of law to defray the fee of legal cases (b) The money which a creditor is under compulsion to accept in settlement of his claims (c) The bank money in the form of cheques, drafts, bills of exchange, etc. (d) The metallic money in circulation in a country 🔠❓MCQ: Consider the following statements (Asked in UPSC-CDS-2011-II) 1. In India the minimum denomination coin acceptable for transaction is 50 paise. 2. Coins below 50 praise is not a legal tender for payment. Which of the statements given above is/are correct? (a) Only 1 (b) Only 2 (c) Both 1 and 2 (d) Neither 1 nor 2 10.6.8 👩🦯🤳🏻 RBI’s App to help the blind identify currency notes 80 lakh people in India are blind (नेत्रहीन). To help them identify currency notes: Old series of Gandhi notes have square (50), triangle (100) shaped markings. New series of Gandhi notes have bleed lines, raised printing of Gandhi etc. But, so many varieties of notes, difficult for VH persons to remember size & shapes so, 2020-Jan: RBI launched ‘Mobile Aided Note Identifier (=MANI)’ App. Mobile camera scan & identifies the note (Even if it’s half folded), gives audio notification in Hindi/English, also works offline But can’t validate whether note is genuine or fake (Counterfeit जाली नोट नहीं पकड़ सकता यह ऐप), If a user is both blind and deaf, the app will tell him by giving vibrations.(मोबाइल कं पन) 10.6.9 💵 Currency related General Knowledge: (Batch:PCB11-RAFTAAR-ONLY-Prelims) Mrunal’s Economy Pillar#1A1 Money: Barter to Bitcoins → Page 14 Which note has what colour, which note has Red Fort / Sun Temple photo etc? General Knowledge ✋Less important for UPSC-exams, more IMP for Non-UPSC Exams. So I’m removing it from Raftaar-Handout. You can learn such general knowledge from https://paisaboltahai.rbi.org.in/ New rupee ₹: selected through a competition by Dept of Economic Affairs in 2010. Designed by symbol D.Udaya Kumar, a Professor @IIT Guwahati. Nation - Lion Emblem: Sarnath Pillar, Uttar Pradesh से लिया गया है Symbol - “Satyamev Jayate”: slogan from Mundaka Upanishad से लिया गया है Languages While Constitution’s 8th Schedule has 22 languages, but currency note has only 17. (15 on Reverse + Hindi & English on frontside (obverse) = 17) 🤯FAQ: Why it is like this? Ans. Either some Indian languages have similar fonts and/or send suggestion to RBI. Museum Budget-2020: a museum on numismatics and trade (सिक्काशास्त्र और व्यापार का सं ग्रहालय) will be built at the historic ‘Old Mint Building’ in Kolkata. 10.6.10 💵 “I promise to pay the bearer…”: Meaning of this promise? Colonia era: Promised to convert into full bodied gold or silver bars / coins worth the equal value in weight. E.g. 1 US Dollar = ~14 grams of gold. 1 British pound = ~73 grams of gold. 👨🏫 ( in my handout ‘~’ means ‘approximate’) Modern era: Conversion into other Bank notes and “token coins” of equal face value. ₹ 2000 = 500 x 4 Nos.= 100 x 20 Nos etc. Not inflation adjusted value. Not linked with weight of gold or silver. Currency note is zero interest, anonymous bearer bond / Promissory Note. 10.6.11 Currency Note is not a promissory note? Doubt: according to some website, currency note is not a promissory note under the negotiable instrument act. then what is write? as per academic books on as per the law (Negotiable Doubt economy? Instruments Act) Is currency note a Yes it has the features of No. It is not. promissory note? promissory note. FAQ: Then what should I tick in MCQ? Ans. Depends on the context and options given in the MCQ. 10.7 💵D EMONETIZATION OF FIAT MONEY (विमुद्रीकरण: PREVIOUSLY 1946, 1978) Definition? Demonetization means the REMOVAL of legal tender status of currency notes. (किसी मुद्रा की वैधानिक-निविदा के दर्जे/ क़ानूनन वैधता को रद्द करना- उसे विमुद्रीकरण या नोटबं दी कहते हैं) (Batch:PCB11-RAFTAAR-ONLY-Prelims) Mrunal’s Economy Pillar#1A1 Money: Barter to Bitcoins → Page 15 8/Nov/2016: Finance Ministry → Dept of Economic Affairs → notification to ban the “Specified Bank Notes” (SBN) of Mahatma Gandhi series ₹ 500 and 1000. Specified Bank Notes (Cessation of Liabilities) Act 2017= RBI not required to honor “I promise to pay…”. Banned notes (500,1000) can’t be kept except for research or numismatics-hobby or museum- 📑pillar#2: taxation → black money. and that too in limited amount! More in SC Judgement on Demonetization ? Ans. REFER📑pillar#2: taxation → black money. 10.8 💵 ₹2000 WITHDRAWN BUT CONTINUED AS LEGAL TENDER 2016-Nov: RBI introduced ₹2000 note, to meet the currency requirement of the economy in an faster manner after demonetisation of ₹500 and ₹1000 (नोटों की किल्लत पूरा करने के लिए इसको छापा जा रहा था) - 2018–19: printing of ₹2000 banknotes was stopped. - 2023-May-23rd: RBI asked people to either any of the following thing by two things 30/Sept/2023. Option at Bank Limit Deposit this note in your bank account no limit. Whatever money you have you अपने बैंक खाते में जमा करवादो can deposit- 2 lakh, 2 crore doesn’t matter Exchange ₹2000 note with other notes e.g. ₹20,000/- per visit 100/200/500 बदलवा दो 10.8.1 💵 ₹2000 NOT DEMONETIZED but WITHDRAWN from circulation (इसका विमुद्रीकरण नहीं हुआ. बस चलन में इसे हटा दिया गया है) - 2023-June: Reporter asked : Will the RBI withdraw the legal tender of ₹2000 note after September 30? - RBI Governor Shaktikanta Das replied: “There is no such idea.” That means Question interpretation is ₹2000 fiat money? Yes is ₹2000 legal tender? Yes is ₹2000 in withdrawn from circulation? Yes is ₹2000 DEMONETIZED? NOT YET.^^ ^^As of 2024-Jan: this is the status, as per RBI official website & CNBC Article. 2024-Jan: over 97% of ₹2000 notes returned. Only ₹9330 cr worth notes NOT yet returned. 10.8.2 💵₹ 2000 withdrawn- WHY? (क्यों चलन से हटाया गया) We will only prepare the official reasons given by the RBI. 2000 Notes were issued as a temporary measure to address shortage of currency. Now there is adequate supply of other currency notes e.g. 100/200/500. This note is not commonly used for transactions. (वैसे भी भुगतान में इसका उपयोग कम ही होता है) (Batch:PCB11-RAFTAAR-ONLY-Prelims) Mrunal’s Economy Pillar#1A1 Money: Barter to Bitcoins → Page 16 RBIs clean note policy: to ensure availability of good quality banknotes to the members of public. 2000 note’s paper has a lifespan of 4–5 yrs. Since most of these notes were printed in 2016–2017. So by 2022–23 its paper quality may start to deteriorate. (चार पांच वर्षों में कागज वैसे भी खराब हो जाता है) THERE IS NO MENTION of fighting black money/ corruption / fake notes by ISI-Dawood in RBI press release. 10.8.3 💰🤮 Money Types: Gresham law: good vs bad money | soft vs hard currency Wait till we reach Pillar 3B: currency exchange. Presently, we’re in Pillar 1A1. If unable to hold patience, watch https://youtu.be/x7rcf13JGh8?si=rkIwvohe38Gbw_FR 10.8.4 Zimbabwe's Gold Coin ‘Mosi-oa-Tunya’ Wait till we reach Pillar 3B: currency exchange. Presently, we’re in Pillar 1A1. 10.8.5 🤫💸👜🥚 Redenomination: Iran’s Toman Currency Removed for #RAFTAAR. Those who want to waste time/satisfy curiosity can learn it from last course (PCB6) at https://unacademy.com/course/mrunals-economy-course-for-upsc-prelims- mains-2022-52/I1OWWV6Y (मेरे को अब ये परीक्षा के नजरिये से बहुत काम का नहीं लगता, इसलिए टॉपिक हटा दिया है) Paper /Token / Commodity Metallic Bank Money, Representative / Crypto Currency Money Money Deposit Money Fiat Money 10.9 🐷🔖B ANK MONEY / DEPOSIT MONEY 10.9.1 🐷🔖 Paper orders: Cheque, Demand Draft (DD) Law Viceroy Ripon’s Negotiable Instruments Act, 1881: Primary Objective? Cheque dishonor & forgery (परक्राम्य लिखत अधिनियम: बेंक खाते मे अप्राप्त रकम के चलते चेक अस्वीकार होना/जालसाजी के ख़िलाफ़ क़ानून). Chequ - THREE parties in a cheque: 1) Drawer (Sender), 2) Drawee (Bank), 3) Payee e (Recipient) - Types of cheques: 1) Stale: Not withdrawn in 3 months (3 महीनों में नहीं डाला तो बासी/अस्वीकार्य होगा), 2) Post-dated: After a specific date, 3) Ante-Dated: notimp for IAS exam. - Open / bearer cheque: No ‘crossing’. Anyone can encash. IFSC IFSC code: Indian Financial System Code- 11 alphanumeric numbers to identify the bank branch, just like PINCODE identifies an area. ( कौन सी बैंक ब्रांच है उसे चिन्हित करता है) MICR MICR code: Magnetic Ink Character Recognition. 9 digits code written in Iron Oxide ink for automated clearance. (चुम्बकीय स्याही से चेक के नम्बर को जाँचने के लिए।) (Batch:PCB11-RAFTAAR-ONLY-Prelims) Mrunal’s Economy Pillar#1A1 Money: Barter to Bitcoins → Page 17 10.9.2 🔖DD and Overdraft - Overdraft: When person has insufficient bank balance, still he may withdraw money from his account (as a loan). Such facility is called Overdraft. Pradhan Mantri Jan-Dhan account has Overdraft upto Rs 10,000/- with certain conditions. (More in Pillar1D: Financial Inclusion). o Overdraft is mainly for short-term operating expenses. (अस्थाई रूप से लघु अवधि के लिए कर्ज) o Loans is mainly for longer term higher value expenses. (दीर्घ अवधि के लिए मोटी रकम का कर्ज लेना) 10.9.3 🐷🔖 Cheque → NPCi’s Cheque Truncation System (CTS) & Positive Pay Mechanism (Batch:PCB11-RAFTAAR-ONLY-Prelims) Mrunal’s Economy Pillar#1A1 Money: Barter to Bitcoins → Page 18 NPCi’s Mechanism Benefit (first SEE THE DIAGRAM) Cheque Truncation If SBI sent the copy of cheque in post/courier = more time wasted. System (CTS) CTS IS FASTER because SBI sending scanned image online. Positive Pay If Mrunal (recipient) manipulated the cheque numbers e.g. using magic- Mechanism marker/eraser to write ₹5,00,000 in place of ₹50,000 YET Roman (Sender) will be protected because both images will not match → then cheque will be rejected by his bank. 🙋🏼♀️FAQ: I still DID NOT understand this. Ans. Watch The video lecture. 🤔FAQ: I’ve 500 counter arguments about how James Bond villain can misuse it? Ans. NOT IMP.#RAFTAAR. 10.10 🐷💸📡 E LECTRONIC ORDERS / DIGITAL PAYMENT Payment & Settlement System Act 2007 empowers RBI to regulate card payment, e-payment related products and services. (भुगतान और निपटान प्रणाली अधिनियम 2007) 10.10.1 💸📡 CBS ( full form: Core Banking Solution /system) It is a banking software with web-platform for centralized data management & branch-less banking. E.g. Finacle software; BanCS software; E-Kuber (used in RBI) 🚩👶🏻🎓 FAQ I didn’t understand this. Ans. Watch lecture, sufficiently explained in it. 🚩👶🏻🎓 FAQ: What is the difference between Core Banking Solution (CBS) versus Core Banking System (CBS)? Ans. Fundamentally it is the same thing. Dictionary word difference/legal pedantry/academic pedantry/hairsplittery= notimp4exam. # 🕰थोड़ा-पढ़ो-आगे-बढ़ो 🔠❓MCQ: The term ‘Core Banking Solutions’ correct term? (UPSC Prelims-2016) 1. It is a networking of a bank’s branches which enables customers to operate their accounts regardless of where they open their accounts. 2. It is an effort to increase RBI’s control over commercial banks through computerization. 3. It is a detailed procedure by which a bank with huge non-performing assets is taken over by another bank. Answer Codes: (a) 1 only (b) 2 and 3 only (c) 1 and 3 only (d) 1, 2 and 3 10.10.2 📡 NEFT vs RTGS vs IMPS Table 4: Digital Payment Systems- transaction limits may differ, depending on banks RBI's centralised payment systems (CPS)## NPCi’s IMPS 👩💻 Type RBI’s RTGS: Real Time ⏰ RBI’s NEFT: National Immediate Gross Settlement Electronic Funds Payment Service (Batch:PCB11-RAFTAAR-ONLY-Prelims) Mrunal’s Economy Pillar#1A1 Money: Barter to Bitcoins → Page 19 RBI's centralised payment systems (CPS)## NPCi’s IMPS Transfer 💸 Transfer Min ₹2 lakh to ₹2000 upto ₹10 lakhs (SBI). ₹ 1 to maximum ₹5 lakhs Amount crores (SBI). 💁♂️Target Bizmen wanting high value transactions Ordinary retail customers (आम जनता के छोटे भुगतानों customers के लिए है) instantly 🚛 Settlement 🤩Instant settlement - Settles net amount between banks at 🤩Instant mechanism (झटपट/ तुरंत निपटारा) settlement interval of 30 min. BEFORE: only weekday BEFORE: only weekday ⏰ Timing office hours. After RBI reforms office hours. After RBI reforms 24/7 on all days (दिन रात अविरल रूप से) 24/7. 24/7. 💰 Fees BEFORE: fee + GST Tax** After RBI Reforms: Rs.0 fee + GST# - BEFORE-2021: Only Banks can provide this Banks + Prepaid facility Payment 👨🏻✈️Who can - 2021: RBI announces that non-bank entities canInstrument provide this also become members of centralized payment (PPI)/ / mobile- facility? systems (CPS = NEFT & RTGS). wallet companies - So, in future, Amazonpay, PhonePe etc could also like Phonepe, directly allow this Mobikwik etc. # Although some banks don’t charge IMPS fees for transactions upto ₹ ”X”/- (EXACT Fig NOTIMP) ## FAQ: 🚩👶🏻🎓 Why doesn’t RBI Merge RTGS & NEFT? Ans. RBI may have some technical operational reasons for it. RBI never bothered to disclose it in some big press release or newspaper headline. So I never bothered to do James-Bond Google search/PHD on it. Because it is an inefficient way of preparing for UPSC. Nonetheless, if u feel morally-outraged then send suggestion to RBI Governor. Until implemented, prepare things as given in handout. (Batch:PCB11-RAFTAAR-ONLY-Prelims) Mrunal’s Economy Pillar#1A1 Money: Barter to Bitcoins → Page 20 10.10.3 📡 LPSS- lightweight payment and settlement system - RBI’s (emergency/backup) alternative to NEFT, RTGS and IMPS/UPI. - To provide a temporary & portable solution during natural disasters and war. (प्राकृ तिक आपदा या युद्ध के चलते बाकी प्रणालियाँ बं द हो जाए तो अस्थायी रूप से इसको इस्तेमाल कर सकते) - Can be operated from anywhere by a bare minimum staff. How it works, what are the features? NOTIMP. 10.10.4 💸📡 RBI’s Next Generation Treasury Application (NGTA), 2020-Oct Deleting from handout. Because yet to be implemented. This topic didn’t develop much after 2020. 10.10.5 📡🚩👶🏻 RBI's Next-Gen RTGS to comply with ISO-XML standards 🚩👶🏻 FAQ by Zhande-walle Babushone: in a recent social media handle, RBI had explained about RTGS and related issues....there i did'nt understand a term, i.e. RBI is doing Next Generation RTGS (NG-RTGS) system upgrade to comply with international ISO 20022 XML standards? Ans. All such technical things are not important for the scope of exam until they continuously grab major newspaper headlines repeatedly. And more importantly, you should stop wasting your time on social media handles with hopes of getting some exam-oriented UPSC knowledge. 👨🏫 Mrunal comments before next section: In the digital wallet apps → companies introduce new features & RBI introduces new technical norms on daily basis. We are not here to write a MBA research paper on their business-model & RBI regulations. Q.“sir u said x thing can’t be done in phonepe App but now it can be done…as (Batch:PCB11-RAFTAAR-ONLY-Prelims) Mrunal’s Economy Pillar#1A1 Money: Barter to Bitcoins → Page 21 per my experience!! Ans. I’ve given simple illustration to explain thing. They keep adding new features in the App. UPSC asking only general broad MCQs from this. # 🕰थोड़ा-पढ़ो-आगे-बढ़ो 10.11 🕵🏻 N ATIONAL PAYMENT CORPORATION OF INDIA(NPCI) 2008: NPCi is registered under Company Act as a “Not for Profit Company”. (मुनाफा रहित कं पनी) Originally it was founded by 10 banks with ₹ 100cr capital. Later on in 2020: Paytm, PhonePe, Amazon Pay etc also became shareholders of NPCi (ये सब शेयर धारकों ने पूं जी डालकर इस कं पनी को बनाया है) Objective? cost-effective payment solutions / technology for Banks. (रियायती लागत पर बैंकिं ग टेक्नोलॉजी) Its UPI-BHIM app & other mechanisms also help in financial inclusion of villagers & poors by expanding the reach of banking network. (गरीबों / गाँववालों के वित्तीय समोवेशन में मदद के लिए अलग अलग तकनीकी आविष्कार किए है) ✅More abt financial inclusion in 📑Pillar# 1D. 🔠 MCQ-EPFO-2023: Consider the following statements: - Statement I: In India, the RTGS and NEFT payment systems are owned and operated by National Payment Corporation of India (NPCI). - Statement II: National Payment Corporation of India is an entity promoted (=owned) by banks. (a) Both right, st2 explains st1 (b) Both right, but st2 doesn’t explain st1 (c) St1 is correct but St2 is wrong. (d) st1 is wrong but st2 is right. Above is not hundred percent technically correct explanation, but it is just to help you visualise the concept. 10.12 🕵🏻 🤳NPCI → UPI (U NIFIED PAYMENT INTERFACE) It is a technology for building digital payment apps based on IMPS with following features: (Batch:PCB11-RAFTAAR-ONLY-Prelims) Mrunal’s Economy Pillar#1A1 Money: Barter to Bitcoins → Page 22 QR Scan & Pay to merchants. You can link bank account for direct transfer of money without storing money in ‘wallet’ first. (unlike AmazonPay / Mobikwick etc) Such app can have Push transaction (e.g. Remittance to family), Pull Transaction (e.g. monthly bill deduction by Electricity Co.) or even Bill sharing among friends. Examples of UPI based app: SBI’s SBIBuddy/Yono, Axis Bank’s AxisPay and NPCi’s BHIM. UPI 2.0 (2018): Upgraded version of UPI. What are its new features? How is it different than UPI 1.0? Ans. NOTIMP #RAFTAAR ️ 🏎🐢 NPCI has been signing agreements with organisations in Bhutan, Nepal, Singapore, Europe, Mauritius, Srilanka etc. so that directly Indian tourists in those foreign countries can directly spend the money from their Indian bank account by using UPI-Based Apps. How? Ans. NOTIMP #RAFTAAR 🏎🐢 10.12.1 🛍️ UPI: daily transaction limits Max amount Category of daily transaction ₹1 lakh/day Normal transactions. Capital Markets (e.g. Mutual Funds) Credit card payments, Loan re-payments/ ₹ 2 lakhs/day EMI, Insurance premium/fees payment etc. Purchase of G-Sec under Retail Direct Scheme, IPO Subscriptions. What is the ₹5 lakh/day meaning of the term? (Ref: Pillar#1C) Medical and educational services payment. Note: above is the status as of 2023-Dec. 10.12.2🤌 UPI: Push vs Pull Transactions UPI based apps allow for both 👉Push transactions and 👉Push transactions. 👉Push transactions 🤌Pull transaction 👉Push = when u send money by your own 🤌Pull transaction = when you have given discretion e.g. sending money to a command that every month electricity relative/friend based on your mood. (आपकी मर्ज़ी company should cut the money from my bank या विवेक से आप ख़ुद जो पैसा भेजते है।) account → company will pull money without requiring u to push/click buttons every month. 🚩👶🏻FAQ: Beyond that, whether “X” thing is push/pull?= Ans. NOTIMP #RAFTAAR 🏎️🐢 (Batch:PCB11-RAFTAAR-ONLY-Prelims) Mrunal’s Economy Pillar#1A1 Money: Barter to Bitcoins → Page 23 10.12.3 🕵🏻 🤳NPCI → UPI → 123PAY for FeaturePhones Figure 1: बेटी मेरे नोकिया के non-smart phone पे UPI आसानी से कै से इस्तेमाल करूँ ? If user doesn’t have a smartphone. If he has a Basicphone/Featurephone- with number pads:- still he can use UPI using USSD (Unstructured Supplementary Service Data) code (99#). However this feature was very cumbersome. It was not very popular among the people. (स्मार्टफ़ोन में तो UPI आधारित ढेर सारी एप्स हैं किन्तु बेजिक/फ़ीचर फ़ोन में UPI द्वारा पैसों का लेन देन काफ़ी जटिल और कनिष्ठ क़िस्म का था. इसलिए लोग इसे इस्तेमाल नहि करते थे। रिज़र्व बैंक और NPCI ने मिलकर नई मुहिम/ प्लेटफ़ॉर्म बनाया ‘123PAY’) So, 2022-March: RBI launched a new UPI platform named 123PAY (with help of NPCI) to give more UPI-payment options for Featurephones/Basicphones such as- - 1) USSD – (This was already available.) - 2) Interactive voice response or (IVR) - 3) missed call-based payments - user sends a missed call and then system calls him back in IVR mode (आदमी मिस्ड कॉल देता है तो सामने से उसे स्वचालित फ़ोन कॉल आएगा जहाँ वो रिकॉर्डेड आवाज़ द्वारा दिए गए सूचनाओं के हिसाब से अलग अलग नंबर दबाकर पैसों का भुगतान कर सकता है।) - 4) proximity sound-based payments -allow transactions using sound waves for contactless payments to other phones. (ध्वनि आधारित स्पर्श-हीन भुगतान) - 5) easier utility bill payment (gas, electricity etc) via feature phone - 6) user need to link the bank account with feature phone. → Money transfer, check account balances, pay utility bills, recharge FAST Tags of their vehicles etc - 7) New app for Featurephone Benefit? 😍⏫ Digital payment- esp. among the poor people who do not have smart phones but have feature phones. (ग़रीब लोग जिनके पास महँगा वाला स्मार्टफ़ोन नहीं है वे भी डिजिटल भुगतान कर पाएं गे.) 10.12.4 🛍️ UPI observations by 📙Economic Survey-ES-2023 Year Total No. of Digital Transactions (Crores) UPI’s Share of Digital Transactions FY19 3,100 17% FY20 4,600 27% FY22 8,840 52% total number of digital transactions steadily increased in the last three years. % share of UPI in the total digital transactions also steadily increased in the last three years. यूपीआई द्वारा डिजिटल भुगतान में काफी बढ़ोतरी हुई है और यह सब बहुत महान है ऐसा आर्थिक सर्वेक्षण ने पाया. (Batch:PCB11-RAFTAAR-ONLY-Prelims) Mrunal’s Economy Pillar#1A1 Money: Barter to Bitcoins → Page 24 🛍️ 10.12.5 UPI single-block-and-multiple-debits functionality (2022-Dec) Not important for the scope of exam / poor cost:benefit in spending time over this topic... after observing the previous years papers. 10.12.6 🛍️ UPI-Lite (on-device wallet) User adds money from his bank account to his UPI Lite wallet on his mobile App. (e.g. Google Pay App, BHIM App) Usage (NUMBER NOT VERY IMP) UPI-LITE Limit as of 01/Sep/23 Max. Limit PER transaction ₹500 Max. Balance / storage capacity of wallet ₹2,000 Max. TOTAL transaction within 24 HRS (i.e. by adding new ₹4,000 money in wallet repeatedly after previous balance is finished. ताकि एसा दुरुपयोग ना हो की हेकर २-२००० हज़ार ख़ाली करके फिर भरता रहेगा और पीड़ित का बड़ा नुक़सान हो जाए।) 🤩 Benefits of UPI-Lite wallet? - 🤩Faster. Because No need to provide UPI-PIN number during transaction. - 🤩Less chances of transaction failure- even if sender’s bank server is facing technical issues. 10.12.7 🛍️🫰🏻UPI-Lite + NFC = Offline Retail Payment / Tap-and-pay RBI aims to implement Near Field Communication (NFC) in ‘UPI-LITE’. For following benefits - 1) off-line transaction will be possible. Helps in villages with poor internet connectivity. - 2) contactless / Tap and Pay facility / touch and pay facility by touching your mobile with merchant’s device. - 3) More faster / error-free transaction. - 🙋🏼♀️FAQ1: What is NFC? Ans. Refer Sci-Tech material. E.g. in USA, u can tap Apple smartwatch with coffeeshop’s POS-device to pay money. - 🙋🏼♀️FAQ2: UPI developed by NPCi. Then why is RBI making all these announcements? Ans. Because RBI is the regulator of such all digital payment technologies. उनके आशीर्वाद के बिना नहीं हो सकता। (Batch:PCB11-RAFTAAR-ONLY-Prelims) Mrunal’s Economy Pillar#1A1 Money: Barter to Bitcoins → Page 25 10.12.8 🛍️💬 Conversational payments in UPI - It will help users to chat/converse with AI-powered systems to make payments. - e.g. similar to how Smart speakers function: ‘Hey Siri/Alexa/Google remind me to buy milk on X date.’. - you can similar payment such a instruction via TEXT or voice note to UPI system. - How it works? Ans. Wait till the official features release. Benefit? - 🤩Voice command more convenient for blind users. - 🤩Text based chat can happen within shopping site. No need to redirect to third-party payment Gateway website like CCBill, CCAvenue, Razerpay, etc. = more secure / efficient. 10.13 🔪P RE-SANCTIONED CREDIT LINE When a banker allows an account holder to borrow upto a predetermined amount of money, without having to apply for a loan, it is called Pre-Sanctioned Credit Line. ( इसका हिंदी करने का मतलब नहीं है. मुख्य परीक्षा में इस प्रकार की चीजें नहीं पूछते) 10.13.1 🔪🛍️ UPI: Pre-sanctioned credit line/Overdraft in UPI (2023-Apr) (Batch:PCB11-RAFTAAR-ONLY-Prelims) Mrunal’s Economy Pillar#1A1 Money: Barter to Bitcoins → Page 26 - RBI allowed Pre-Sanctioned Credit Line / overdraft facility extended to UPI. (यूपीआइ में ओवर ड्राफ्ट की सुविधा) - So, even if a person does not have balance in his bank account, still he can PAY using UPI while shopping. (and then later, when he gets the salary/pension/income deposited in his bank account, then the banker will recover the principal and interest.) 10.13.2 🔪🛍️ UPI: Benefits of UPI-overdraft facility? - Help customers in “Buy now pay later (BNPL)” format of shopping. (Ref: Pillar#1B1 for more) - Poor people require small small amount of money/loans during last weeks of a month. They cannot travel to the city’s bank branch for the paperwork and banker may take many days to pass application. Consequently, poor villagers borrow from the local moneylender/Shroff/Baniya at high interest rate. UPI-Overdraft can help overcoming this to some extend. = helps in Financial inclusion of the poor. (गरीबों के वित्तीय समावेशन में मदद) 10.13.3 🛍️ UPI: Interoperable Card-less Cash Withdrawal (ICCW) - (ATM मशीन में बिना CARD डाले, मोबाइल ऐप के ज़रिए पैसा निकाला जा सके ऐसी सुविधा) - Benefit? If physical card not inserted in ATM machine → ⏬ dangers of card cloning, etc scams. 🙋🏼♀️FAQ: How does it work? My bank not giving this facility?! Ans. 1 line word association for MCQ is enough. 10.13.4 🛍️ UPI: QR Code based Coin Vending Machine using UPI (2023-Feb) Traditionally New experiment by RBI in 2023 insert paper-note to get coin scan QR code➡️transfer money from bank account via UPI ➡️to get coins from machine कागदी नोट ➡️मशीन में डालकर छु ट्टे पैसे अपने बैंक खाते से UPI/QR-code द्वारा पैसा कटवाके बदले में मशीन से छु ट्टे पैसे निकालो निकालो (Batch:PCB11-RAFTAAR-ONLY-Prelims) Mrunal’s Economy Pillar#1A1 Money: Barter to Bitcoins → Page 27 10.13.5 🕵🏻 🤳 NPCI → UPI BHIM Full form: Bharat Interface for Money (2016) Money transfer app designed by NPCi. It works on Android, iOS/Apple mobiles as an APP, Works even on non-smart (=basic feature) phones using *99# USSD- Unstructured Supplementary Service Data. Bank to bank / peer to peer transaction using mobile phone (xyz@upi). No need to install multiple apps for each bank account (SBIBuddy, AxisPay etc) just one BHIM app to use all such bank accounts. (1) App has 3 factor authentication system- as per Indianexpress (2) App has 2 factor authentication system as per NPCi website. ( 🚩👶🏻FAQ: then which fact is true? Ans. i'd go for official website.) Your money stays in bank account and earns interest. It’s not stored in ‘wallet outside your bank account’ as it happens in Mobikwick, Phonepe etc. (PS: in later stage, PhonePe etc private apps also included UPI type mechanism so storing money in ‘wallet’ became optional but we need not engage in Hairsplittery/PHD.) No cards involved so no MDR or such hidden charges. 10.14 🕵🏻 💳 NPCI → R UPAY CARD PAYMENT GATEWAY (2012) Rupee + Payment = RuPay card is world’s 7th payment gateway similar to Mastercard, Visacard, China’s Union Pay. Rupay charges less fees than other companies. Works in 3 channels: 1) ATM, 2) Point of Sale Device (PoS/card reader machine), 3) Online portals. Rupay debit card given free with PMJDY (Jan Dhan) Bank account (Refer Pill#1D). Rupay has signed collaboration agreements with some digital payments companies in Singapore, Japan etc. So, it may be used in those countries. But presently Rupay is not having the widest reach across all the countries unlike MasterCard and Visa. (Batch:PCB11-RAFTAAR-ONLY-Prelims) Mrunal’s Economy Pillar#1A1 Money: Barter to Bitcoins → Page 28 10.14.1 🕵🏻 NPCI other notable initiatives Table 5: NPCi has built following mechanisms / platforms / systems / apps: - Bharat Bill Payment system for monthly payments of utility bills (gas, electricity etc.) - 2022-Jan: NPCi ‘s daughter/subsidiary company Bharat BillPay Ltd. BBPS & UPMS Company → launched a Unified Presentment Management System (UPMS) → but technical stuff. NOTIMP4 exam 😤FAQ: How is BBPS vs UPMS similar or different? Ans. NOT IMP 4 Exam. These are one-liner GK. Not PHD thesis topics! NFS National Financial switch. This technolo
