In addition to the official coins minted by government during the British India period, many states issued its own coins made of thick paper and cardboard in smaller denominations for local use only.
After the Independence War of 1857 Queen Victoria gave the privilege to the Indian Princely States to issue coins in metal and paper, in their own names. These paper and cardboard coins were issued by small states who could not afford to mint the metal currency. Although there were more than 500 princely states, only 110 could issue their own currency.
Source: ‘Tips for coin collectors & numismatic terminology’ at Coins of British India (1857-1947)
To learn more about the monetary system of British India we would like to invite you to read this blog post: ‘The Raj Collection’ by Decimononic.