Proportional Reserve System

Originally, the assets of the Issue department were to consist of not less than 2/5th of the Gold or sterling securities, provided Gold was NOT less than ` 40 Crores in value. Remaining 3/5th of the assets might be rupee coins. This was called “Proportional Reserve System“. The system changed in 1956. Since then, RBI is required to maintain a Gold and Foreign Exchange Reserves of ` 200 Crore of which at least ` 115 Crore should be in Gold. This is called Minimum Reserve System. This system continues till date.