India has _________ related to note issue.
Minimum Reserve System
The method of note issue decides what reserves the central bank must hold against the currency it issues.
Under the RBI Act, 1934, India originally followed the proportional reserve system: 40% of notes issued had to be backed by gold coin, gold bullion and sterling securities.
As planned development required more currency, the RBI (Amendment) Act, 1956 replaced it with the Minimum Reserve System: the RBI must keep minimum reserves of 515 crore rupees – foreign securities worth 400 crore rupees and gold worth 115 crore rupees. From 1957 this was cut to a total of 200 crore rupees, with gold at least 115 crore rupees.
Once this minimum is held, the RBI can issue notes to any extent the economy needs. India does not follow a gold standard or a dollar standard for currency.
Hence, the answer is Minimum Reserve System.
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