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coins--notes

1️⃣ Early Forms of Money & Coins

  • Ancient/Medieval: Silver Tanka, Sher Shah Suri Rupiyah.
  • Full-bodied coins: Coins whose metallic value was equal to their face value (e.g., historical Silver and Gold coins).
  • Token coins: Coins whose metallic value is less than their face value (e.g., modern metallic coins).
  • Issuing Authority (Coins): Government of India (GoI)
  • Governing Act (Coins): [[Coinage Act, 2011]] (Regulates denominations, weight, and legal tender status).

2️⃣ Paper Currency & Fiat Money

📄 Paper Currency

  • All modern paper currency (except the ₹1 note) is issued by the Reserve Bank of India (RBI).
  • Paper currency is a form of Fiat Money.

💡 Fiat Money (Definition)

  • Money that has no intrinsic value (the paper/metal is worth less than the face value).
  • Its value is backed entirely by government decree/authority (hence, ‘fiat’).
  • Must be issued by: Government or Central Bank.
  • Forms: Physical coins/notes, Virtual money, Digital money.

📌 Definition

  • A coin or banknote that is legally valid for the payment of debts or other obligations.
  • Must be accepted for all transactions within the country, and the receiving party cannot refuse acceptance.

✅ Conditions for Legal Tender

  1. Must be Fiat Money.
  2. Must be legally valid for all debts and transactions throughout the country.

❌ Not Legal Tender (Examples)

  • Non-Statutory/Promise-based: Cheques, Demand Drafts (DDs).
  • Plastic Money/Digital Instruments: Debit Cards, Credit Cards, e-Wallets (these are payment methods, not legal tender itself).

🪙 Coins

  • Issuer: Government of India.
  • Governed by: Section 6 of the Coinage Act, 2011.
  • Legal Tender Status: Valid as long as they are not defaced or below the prescribed weight.

    [!NOTE] Limit: Coins are legal tender up to a certain maximum amount per transaction (e.g., ₹1,000 for coins of ₹1 and above).

💵 Notes

  • Issuer: Reserve Bank of India (Banknotes: ₹10, ₹20, ₹50, ₹100, ₹200, ₹500).
  • Exception: ₹1 Note is a ‘Currency Note’ issued by the Government of India.
  • Legal Tender Status: Guaranteed by the Central Government; legal tender unless formally withdrawn.

5️⃣ Major Currency Events

💰 Cash Transaction Limit (Finance Act, 2017)

  • Cash transactions for a single event are allowed below ₹2 lakh only.

📉 ₹2000 Note Withdrawal (2023 Update)

  • RBI announced withdrawal in May 2023 under the Clean Note Policy.
  • Status: Notes remain Legal Tender.
  • Exchange/Deposit Timeline:
    • At all bank branches: Until October 7, 2023.
    • Post-October 7, 2023: Facility is available only at the 19 Issue Offices of the RBI (or by post).

6️⃣ Bank Money & Negotiable Instruments

🧾 Cheque

  • Definition: A written, unconditional order to a bank to pay a specified sum.
  • Governed by: [[Negotiable Instruments Act, 1881]].
  • Status: A Negotiable Instrument (transferable document promising payment).

💸 Demand Draft (DD)

  • Purpose: Bank-to-bank money transfer (guaranteed payment).
  • Status: Also a Negotiable Instrument.

7️⃣ Electronic Payment Systems (Regulated)

  • Digital payments are regulated under the [[Payment and Settlement Systems Act, 2007]].

🔁 IMPS (Immediate Payment Service)

  • Management: National Payments Corporation of India (NPCI).
  • Feature: Real-time, 24x7, instant fund transfer.

💳 RTGS (Real-Time Gross Settlement)

  • Management: RBI.
  • Feature: High-value inter-bank transactions settled individually and immediately (‘Gross’).
  • Update (2021): Non-bank entities (like large fintech firms) allowed as direct members.

🏦 NEFT (National Electronic Funds Transfer)

  • Management: RBI.
  • Feature: Clears transactions in batches; available 24×7, 365 days (since Dec 2019).

8️⃣ NPCI – National Payments Corporation of India

📌 About NPCI

  • Organization: Umbrella organization for retail payments.
  • Promoted by: RBI & Indian Banks’ Association (IBA).
  • Legal Status: Section 8 (Not-for-Profit) Company under Companies Act, 2013.

📱 NPCI Products

  • UPI (Unified Payments Interface): Instant, P2P and P2M (Person-to-Merchant) inter-bank transfer using a virtual payment address (VPA). Launched in April 2016.
  • BHIM (Bharat Interface for Money): NPCI’s own UPI-based mobile payment application. Launched in December 2016.
  • RuPay: India’s indigenous card payment network (domestic equivalent of Visa/Mastercard).

🆕 Newer UPI Initiatives

  • UPI123Pay (2022): Feature phone-based UPI, enabling transactions via IVR, Missed Call, etc.
  • UPI Lite (2022): On-device wallet for offline small-value transactions.
    • Transaction Limit: ₹200.
    • Wallet Limit: ₹2,000.