Lose your rupees today and all you can do is cry over them or shrug off your loss, but there was a time, many years ago, when you could claim the value of your lost currency in India.
Reserve Bank of India even now allows the exchange of badly mutilated notes — not merely those held together with a bit of plastic tape — but it is not so indulgent in the matter of lost currency. Its note refund rules clearly state: “No claim in respect of a note, which is alleged to have been stolen, lost or wholly destroyed, shall be entertained.”
Even 100 years ago, the Bank would have looked at you suspiciously if you came to plead you had lost money, but then it would have pushed some forms your way to write down the serial numbers of the lost notes. And then, your notes would have been ‘stopped’ pending an investigation.
This was standard practice wherever English banking rules applied. If loss of or damage to currency was reported, the central bank investigated and paid the claimant after verifying their claim. The picture below shows a public notice page from The Official Gazette of the Colony and Protectorate of Kenya, dated January 27, 1948. It is a call for counter-claims to verify some claims to mutilated currency.
The book English Practical Banking (1894) says if the original owner of a note promptly reported its loss, their money could remain safe: “In case of notes being lost they can be ‘stopped’ by giving full particulars to the issuing bank, who thereafter, if the notes are presented for payment, will make inquiries as to the title of the presenter.”
Whether the original owner got back their money or not depended entirely on the outcome of the bank’s inquiry, but regardless of the outcome they had to pay a fee. “When notes are stopped at the Bank of England the bank makes a charge of 2s, 6d for registering the stop.”
Rules for India
The book Remarks on the State Paper Currency of India (1868) contains this notification issued from Shimla on July 30, 1866:
Rules regarding the payment of lost or mutilated government currency notes:
1) Notes which have become slightly mutilated will be readily paid to bona fide holders upon a written statement as to the circumstances of mutilation, and upon an indemnity being signed by a banker or some known responsible person.
2) Applications will be received for the payment of notes which have been seriously mutilated or wholly lost or destroyed, provided they can be identified by the number and date; but they will be subject to a strict investigation, and will be paid only on the authority of the Head Commissioner of Paper Currency, Calcutta, or the Commissioner at Madras or Bombay, at whose Head Circle the note may be payable.
This system worked because the number of notes in circulation was relatively small then, and also the rupee was worth a lot more than it is today. You could live very comfortably for a month on a Rs 100 note back in the 1940s.
This infographic shows that at the start of World War II in 1939, a Rs 100 note was worth Rs 20,544 in terms of 2013–14 rupees. So, it made sense for RBI to take the trouble to investigate complaints of lost notes, but as the rupee went on losing value, and the number of notes in circulation increased tremendously, this facility became a burden.
Finally, in 1956, Government of India withdrew the facility. Asked about it in Parliament on February 27, 1958, then deputy finance minister B R Bhagat replied: “Registration of Rs 100 notes was discontinued in India with effect from the 1st of July, 1956. Circulation of these notes during and after the Second World War increased enormously and it was becoming impracticable to keep the posting of issues and cancellations of such notes up-to-date without abnormal increase in the Reserve Bank’s expenditure.”
Besides, by 1956 the value of a Rs 100 note had also diminished to just Rs 5,126 in 2013–14 terms.
“Not many members of the general public kept a record of the numbers of these notes and hence relatively few could actually avail of the facility for payment of value on the lost, destroyed or mutilated notes on the basis of numbers. There was also a general complaint from the public that the procedure prescribed for payment of notes on the basis of numbers was cumbersome, tedious and expensive,” Bhagat added.
And so it was that 60 years ago, we learnt to cry over or shrug off the loss of our money because getting it back was not possible anymore.