Under the current regulatory framework, the Government of India is responsible for the designing and minting
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Legal Tender Status: According to Section 6 of The Coinage Act, 2011, coins issued by the Government are legal tender for payments, provided they have not been defaced and have not lost weight below a prescribed limit.
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Role of the RBI: Regarding coins, the RBI’s role is limited to the distribution of coins supplied by the Government of India .
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Limited vs. Unlimited Tender: Coins are categorized as limited legal tender, meaning recipients can legally refuse to accept them for payments beyond a certain limit.
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In contrast, currency notes are unlimited legal tender and can be used to settle any amount of debt, though the Government can impose specific restrictions (such as those in the Finance Act 2017, which limits certain cash transactions to less than ₹2 lakh)
Defining Legal Tender
As defined in the sources, legal tender is a form of payment—either a coin or a banknote—that must be accepted by law to settle debts or financial obligations within a specific jurisdiction [4]. To be considered legal tender, it must fulfill two conditions:
- It must be fiat money (issued by the order of the Government or Central Bank) [2, 4, 5].
- It must be legally valid for all transactions throughout the country, meaning the other party cannot refuse to accept it [2].
Notably, the sources clarify that while physical notes and coins are legal tender, instruments like cheques, demand drafts, debit cards, and credit cards are not legal tender [2].