Rs 5 Indian note stamped with ‘Government of Pakistan’ @RareHistorical | Photo Credit: Twitter  |  Photo Credit: Twitter
India will be celebrating its 75th Independence Day tomorrow on August 15, 2021. The end of British raj and the establishment of an independent nation also led to the division of the subcontinent into two parts — India and Pakistan. The Partition was marked by an outbreak of violence over the division of territories, powers, and assets.
The partition posed several delicate problems as there were arrangements needed over issues related to currency and coinage, management of exchange and public debt, transfer of staff and property, and division of profits, assets, and liabilities.
The partition saw the division of the two provinces of Bengal and Punjab, defence forces, railways, and central treasury. Though partition led to the division of several domains, Pakistan continued to use Indian currency with ‘Pakistan’ stamped on it for about one year after Independence.
It is an interesting fact that the Reserve Bank of India used to supply currency to newly-established Pakistan and it also served as the central bank till the State Bank of Pakistan commenced operations.
The first currency to be used in Pakistan after its creation was the Indian Rupee, which had “Government of Pakistan” printed on it in English and “Hakumat-e-Pakistan” printed in Urdu on the white area of the note. The first note of the State Bank of Pakistan of Rs 2, along with the Government of Pakistan Re 1 note, was introduced in March 1949.
The notes were in the denominations of Re 1, Rs 2, Rs 5, Rs 10, and Rs 100 which were demonetised from January 15, 1952.
The Reserve Bank of India functioned as the common currency authority of the two countries till June 1948 as it was not possible for Pakistan to set up a central bank immediately after the partition. Therefore, India and Pakistan reached an agreement under “Monetary System and Reserve Bank Order 1947” and decided that the Reserve Bank of India should continue to function as the central banking authority for Pakistan until September 1948. However, the Reserve Bank of India was relieved from its duties as the central bank for Pakistan in June 1948, a month before the State Bank of Pakistan came into existence.
The first notes, issued by the Pakistan government from October 1948, were in the denominations of Rs 5, Rs 10 and Rs 100, and printed with the intaglio process by Ms Thomas De La Rue & Co. London.
The State Bank of Pakistan took over the note-issuing authority in 1953, when 2, 5, 10 and 100 rupees notes were introduced, however, the Pakistan government continued to issue Re 1 notes until the 1980s.