This is why RBI has taken out some Rs 5 coins out of circulation

Some news reports suggest discontinuation of the five-rupee coin in the market. However, both the central government and the Reserve Bank of India (RBI) do not issue five-rupee metal coins, only brass coins are in circulation in the Indian market.  

There are two kinds of five-rupee coins in circulation in India. A brass one and the other is of a thinker metal. However, the latter one has seen a reduction in circulation recently. 

Why the RBI is discontinuing the five-rupee coins because of the metal used in them. It can be melted to make products that could cost over Rs 5. There are rules that prevent the value of the metal in a currency from being used to gain more than its monetary worth. This is one of the primary reasons that RBI decided to stop the production of five-rupee metal coin.  

Another very significant reason to discontinue the production was illegal smuggling to Bangladesh. The metal used in these coins being heavy and produced in large amounts that it became lucrative for smugglers who used to export them to Bangladesh. This lessened the circulation of these coins in India at a big level. 

These coins were made into razor blades after melting in Bangladesh. A single five-rupee metal coin be melted to make six such razor blades and each could be sold for Rs 2, making the worth of the original five-rupee coin to be Rs 12 after selling these blades. 

The government became aware of this usage of coins and replaced the metal with another element and also altered its appearance. The new five-rupee coins are made thinner and blended the metal with other metals worth less than the original. Hence, discouraging the illegal export of five-rupee metal coins.  

These were some of the economic factors behind discontinuing the old five-rupee metal coins. At present, there are coins of Rs 1, 10 and 20 in circulation in the market.