Why is the circulation of the old Rs 5 coin declining?

Curious about the decline in circulation of the old Rs 5 coin in India? Discover the reasons behind this shift, including changes in minting priorities, economic factors, and public perception.

Old 5 Rupee Coin

While Re 1, Rs 2, Rs 5, Rs 10, and Rs 20 coins are in circulation, the old Rs 5 coin is less common. New copper-colored Rs 5 coins are increasing. This raises the question of the old coin's validity. Let's explore the real reason behind this decline.

The older, heavier Rs 5 coins, made of cupro-nickel, weigh about 9 grams. Some are smuggled to Bangladesh, melted, and made into knives for profit.

One Rs 5 coin can yield six knives, each selling for Rs 2, resulting in a Rs12 profit. This lucrative business fuels smuggling. The Reserve Bank of India responded by halting production of the old coin and introducing a new one.

The new Rs 5 coins are thinner, lighter, and made of a cheaper metal. This explains the decreased circulation of the old Rs 5 coin and the increased presence of the new one.

Stopping production of the old Rs 5 coin aims to curb smuggling. This is the primary reason for the decline in its circulation.