Why is the RBI Removing Certain ₹5 Coins?

The Reserve Bank of India (RBI) has decided to phase out older, heavier ₹5 coins due to economic and security concerns.

Key Reasons for the Decision:

1. High Metal Value and Misuse
   • The older ₹5 coins were made from materials with a high market value.
   • Some people melted these coins to make products like blades, which could be sold at a profit.
   • For example, melting one ₹5 coin to make 5 blades, and selling each blade for ₹2, earns ₹10. This shows the metal in the coin is worth more than the coin itself.
2. Cost of Production
   • Producing the older ₹5 coins was expensive, as the cost of the metal and production exceeded the coin’s face value.
3. Illegal Smuggling
   • These coins were also being smuggled to Bangladesh, where they were melted down and reused, causing a shortage of coins in India.

What About the New ₹5 Coins?

• The newer brass ₹5 coins, which are lighter and cheaper to produce, are still in use.
• The RBI has clarified that it is not stopping ₹5 coins entirely, just the older, thicker ones.

Current Situation:

• There are two types of ₹5 coins: one made of brass and one heavier type.
• The production of the thicker coins has already stopped, and they are now being phased out.

Approval Process

• The RBI needs approval from the central government to stop or introduce any coin or currency.

Coins in Circulation

Currently, coins ranging from ₹1 to ₹20 are in circulation. There are also reports of new ₹30 and ₹50 coins being introduced soon.

By removing the older ₹5 coins, the RBI aims to reduce misuse, lower costs, and ensure a more efficient currency system.