The year 2018 marks the 100 years of Osmania Sicca Rupee

This post is a result of fascinating twitter exchange yours truly had with one of the keen observers of Indian monetary history (Bodhisatva).

The discussions led to paper currencies issued by Princely States of Hyderabad and Jammu and Kashmir. Yes, as per records these were the only two Princely States which issued their own paper currency though some others issued their coins as well. On checking the details of Hyderabad currency, one was delighted to read it started in 1918, making 2018 its 100th anniversary.

Thus, this post to commemorate the 100th anniversary of the currency. The post was written by picking several sparse resources available on the web and RBI history. It will be great to add on to this post and correct me as well.

The Hyderabad State was already issuing coins. Infact its coinage was a mess as there were multiple mints and coins circulating across the region. Later the Government wanted to issue its paper currency as well. It wanted to start a bank which apart from issuing the currency will also help in other government functions. The State Bank will also help in organising private bankers and local moneylenders in the state. The British resisted these attempts for the obvious reason that they wanted complete monopoly over currency not just in British India but even across Princely States.

The Hyderabad State got their opportunity during World War I. There was acute shortage of silver leading British to start printing notes of Rs 1 and Rs 2.5 in 1918 to ride the crisis. They also permitted the Hyderabad State to issue its currency in 1918. These notes were issued under the Hyderabad Currency Act and were named as Osmania Sicca Rupee.  The name came from coins where earlier coins were called Hali Sicca (current coins) and then name was later changed to Mahboobia Sicca and finally to Osmania Sicca.

The rate of exchange was kept at Rs 116 Rupees, ten annas and eight pies of Osmania Sicca Rupee = 100 Indian Rupees. The British India Rupee also remained legal tender in the State.

Just like British started paper currency in India with high denomination notes, the same was the case in Hyderabad as well.  The first notes were in denominations of Rupees Rs 10 and Rs 100 leading to little usage amidst the public. The Government quickly issued Rupee 1 and Rupees 5 notes in 1919 and later issued Rupees 1000 notes in 1926. The earliest notes were printed in England and when the British established the Currency Notes Press at Nasik, the Hyderabad Government started to print its notes in Hyderabad. Hence outsourcing printing of banknotes is hardly anything new.

Wikipedia says that there were 15 series of the OS in the period 1918-53 which is quite something. These were all signed by different people barring two times. The second series remained unissued and 12th issue is historic as it was issued in the short period that Hyderabad attempted to become independent as a constitutional monarchy with the British Commonwealth. The 13th, 14th and 15th issue were after State of Hyderabad became part of India. Were so many issues also to check for counterfeiting?

Another notable feature was that that currency’s value was written in 5 languages along with Urdu: English, Kannada, Telugu and Marathi, catering to social distribution in the State.

The Nizams established a Paper Currency Department to regulate the earlier issues. However, the currency circulation did not really pick up. This led to formation of State Bank of Hyderabad in 1942. Its mandate task was to ensure free circulation of OSR and manage the purchasing power of its currency. It was both a central bank and a commercial bank for the State.

On 21 Dec 1947, the Nizam’s Government ushered an Ordinance where all in terms of which all cash receipts and payments inrespect of goods sold, property conveyed or services rendered in Hyderabad were to be made only the Hali Sicca currency. However, this order was not very effective. In Sep 1948, the restrictions on usage of Indian currency were removed and plans were drawn to withdraw the State currency and make Indian Rupee the sole legal tender in the State. As per RBI history (1935-51):

In terms of the plan, the Hyderabad Government issued, on January 25, 1950, the Indian Currency (Legal Tender) Regulation, 1359 Fasli, in terms of which, effective January 26, 1950, the date on which Hyderabad acceded to the Indian Union, all coins, bank notes and currency notes which were legal tender in India became legal tender in the State of Hyderabad too. The Hali Sicca currency circulating in Hyderabad State also continued to be legal tender; arrangements were made for its conversion into India notes and coin at the rate of Hali Sicca Rs. 116-10-8 for India Rs. 100.

 Effective April 1, 1951, the Indian Coinage Act, 1906 and the Currency Ordinance 1940 were extended to the Hyderabad State under the Part B States (Laws) Act, 1951, and the corresponding State laws (the Hyderabad Currency Ordinance and the Hyderabad Currency Act) were repealed. With effect from April 1, 1955, Hali Sicca currency ceased to be legal tender.

 On January 26, 1950, the circulation of Hali Sicca currency (notes, rupee coin and small coin) amounted approximately to Hali Sicca Rs. 48 crores or India Rs. 41 crores. With the progressive replacement of Hali Sicca currency by Indian currency as from that date, the circulation of Hali Sicca currency steadily declined and stood at Hali Sicca Rs. 6.4 crores (or India Rs. 5.5 crores) at the end of March 1955.

In 1960. the State Bank of Hyderabad was made one of the State Associate Banks. ending the entire saga. More on this demonetisation here

Infact, this piece is not just about celebrating the 100th anniversary of the currency. It is also about highlighting this delightful aspect of Indian monetary history which has interesting lessons for today.

In 1999, the eleven European countries gave up their own currency to form a single currency Euro thus sealing the so called European Monetary Union. Nearly ten years later, the Union project came under trouble due to the 2008 crisis. There were many discussions on whether stronger members like Germany or the weaker countries like Greece, Italy etc should exit the single currency project. Some others pointed how European monetary union preceded the fiscal union which is the main reason for the crisis.  The experts cites examples from both sides, on how US built its fiscal union before its monetary union and how some other monetary unions broke down in recent years.

In all this, once again lessons from India were not discussed. Infact, in 1947, India went through both monetary union and disunion (if one can call it that) during its Partition. The union was with the Hyderabad Rupee and disunion was obviously with Pakistan. India has long been seen as a land of experiments for development economists, but least have we realised the same applies to monetary economists as well.

2 Responses to “The year 2018 marks the 100 years of Osmania Sicca Rupee”

  1. Ken Kostyo Says:

    wonderful to finally see some nice work on the diverse currency history of India. thank you! is anything known about the monetary policy? were to notes commodity backed / debt issuance like most of Bank of England history or were they fiat releases like the USA Greenback? The 1918 history is relevant — around the time the UK started releasing the fiat Bradbury Pound (to finance the domestic economy while the silver and gold were used to finance the war in Europe). You mention the precious metals shortage so that would make these notes very very important to world monetary history. Where they successful? I suspect, yes, because I understand the economy of Hyderabad to have been rather prosperous during its last decades. Thank you again! Greetings from chilly windy Amsterdam!

    • Amol Agrawal Says:

      Thanks Ken for this comment and sharing several observations. One blogs hoping to get such comments. You are right that history of Indian currency is hardly given the importance it deserves. The Hyderabad notes did well but as British Rupee was already well accepted and a legal tender through much of India, the impact could not be as much. The Government did try and make Osmaina Rupee as the sole legal tender in the region but was not really successful. And thanks for the chilly windy greetings from Amsterdam. Sending hot and dry greetings from Ahmedabad.

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