World of Coins

Collecting coins => Coin collecting => The law, breaking it, international shipping => Topic started by: Bimat on July 16, 2015, 11:41:30 AM

Title: MP High Court Summons RBI, Finance Ministry and eBay for Sale of Coins and Notes
Post by: Bimat on July 16, 2015, 11:41:30 AM
The Indore bench of Madhya Pradesh High Court has summoned RBI, Finance Ministry and three Indian online shopping sites (OLX, Quikr and eBay India) over the sale of (Republic) India coins and banknotes. Apparently, the petitioner believes that it's not permitted to sell coins or banknotes at a premium on websites. The high court has given a time of three weeks to RBI/FM/Companies to respond.

Aditya
Title: Re: MP High Court Summons RBI, Finance Ministry and eBay for Sale of Coins and Notes
Post by: asm on July 17, 2015, 04:50:22 AM
I have been given to understand that an RTI querry had revealed that it is illegal to trade in currency at either a discount or a premium.

Mr Rajgor has complicated matters by writing to the PMO, PM and the RBI seeking a license to trade in fancy number / birthday notes etc at a premium.

I do not think it would be legal any where in the world to trade in circulation notes and coins at a premium or discount.

Amit
Title: Re: MP High Court Summons RBI, Finance Ministry and eBay for Sale of Coins and Notes
Post by: dheer on July 17, 2015, 05:40:52 AM
Interesting.

It would just mean that Coins cannot be sold, but a package can be sold. i.e. If I put a coin in a package then is there something stopping me from doing?

Similarly if I arrange notes along with some other theme, would it still be illegal?
Title: MP High Court Summons RBI, Finance Ministry and eBay for Sale of Coins and Notes
Post by: Bimat on July 17, 2015, 05:44:09 AM
AFAIK, the petition only seeks ban on selling of commemorative/regular coins issued for face value and b'day banknotes etc at a premium. There's no word on proof sets, unc sets, mint packaged single coins etc. So I think you are right about coins, but it would be hard to sell any kind of current banknotes as RBI doesn't sell 'special banknotes' like many other banks.

Aditya
Title: MP High Court Summons RBI, Finance Ministry and eBay for Sale of Coins and Notes
Post by: Bimat on July 17, 2015, 05:46:55 AM
I have been given to understand that an RTI querry had revealed that it is illegal to trade in currency at either a discount or a premium.

Mr Rajgor has complicated matters by writing to the PMO, PM and the RBI seeking a license to trade in fancy number / birthday notes etc at a premium.

I do not think it would be legal any where in the world to trade in circulation notes and coins at a premium or discount.

Amit

Yes, I saw that letter he posted on Facebook. I have been told that hundreds of collectors, dealers and coin groups have already written to PMO (I didn't) and they are expecting positive results. But it would be hard for PMO/Finance Ministry to allow selling of  current coins or banknotes at a premium and provide a license for the same; it's a dangerous thing to do as it can be easily misused.

Aditya
Title: Re: MP High Court Summons RBI, Finance Ministry and eBay for Sale of Coins and Notes
Post by: asm on July 17, 2015, 10:38:14 AM
Selling the current circulating coins / notes at a premium is akin to black marketing.........No sane government or central bank can permit it. In fact, for all I know, Rajgor has really put is foot on  beehive.................

I believe that this will hit all auction houses too............the first casualty I think is the CNG Auction in August in Ahmedabad. A look at the listing shows that it stops at Princely states. All BI & RI have apparently been removed.......

Amit
Title: MP High Court Summons RBI, Finance Ministry and eBay for Sale of Coins and Notes
Post by: Bimat on July 17, 2015, 10:40:10 AM
Why ban BI coins and notes? They are not legal tender now... ???

Aditya
Title: Re: MP High Court Summons RBI, Finance Ministry and eBay for Sale of Coins and Notes
Post by: asm on July 17, 2015, 10:57:50 AM
Why ban BI coins and notes? They are not legal tender now... ???
I do not think there will be a ban on those .......may be Shatrughan is being a bit extra safe.......... he already has an issue of last years auction hanging on his head.

Amit
Title: MP High Court Summons RBI, Finance Ministry and eBay for Sale of Coins and Notes
Post by: Bimat on July 17, 2015, 12:45:21 PM
Woha, eBay India has sent message to all its registered members selling stuff on site saying that eBay is not responsible for selling anything that it is prohibited by law. The responsibility lies with the seller and the eBay user agreement specifically mentions so. Sale of legal tender coins, stamps and banknotes is prohibited and the seller shall ensure that there's no violation of the laws. Those doing so may face actions like suspension of account, criminal/civil legal action.

In short, seller shall take care of himself, eBay is not going to help him!

Aditya
Title: Re: MP High Court Summons RBI, Finance Ministry and eBay for Sale of Coins and Notes
Post by: cmerc on July 17, 2015, 02:34:30 PM
If this, for whatever incredible reason, is upheld, then the first coin I will get is 1835 double mohur, for Rs. 30  >:D

 
Title: Re: MP High Court Summons RBI, Finance Ministry and eBay for Sale of Coins and Notes
Post by: Pabitra on July 17, 2015, 03:12:17 PM
Is the notice from eBay India or eBay.com?

Does it mean that even packing and postage charges are to be borne by sender?

I think on eBay India, major activity is fancy number notes and not circulation coins.
Title: Re: MP High Court Summons RBI, Finance Ministry and eBay for Sale of Coins and Notes
Post by: asm on July 18, 2015, 07:06:03 AM
Could be separately invoiced I think.......... A loop hole to charge a premium.

AMit
Title: MP High Court Summons RBI, Finance Ministry and eBay for Sale of Coins and Notes
Post by: Bimat on July 18, 2015, 09:18:34 AM
Is the notice from eBay India or eBay.com?

eBay India.

Apparently, the petitioner wants to ban sale of legal tender coins not only on online sites like eBay but also in coin shows held in all parts of India. The whole drama started last week when Indore Coin Fair was in progress I think. Rajgor's letter to PMO may add fuel to it.

If this, for whatever incredible reason, is upheld, then the first coin I will get is 1835 double mohur, for Rs. 30  >:D

The petition only states Republic India coins, so we are not so lucky... :'(

I also wonder if the court will allow selling legal tender coins from other countries! ;)

Aditya
Title: Re: MP High Court Summons RBI, Finance Ministry and eBay for Sale of Coins and Notes
Post by: Enlil on July 18, 2015, 11:21:52 AM
Thats a bit pathetic banning the selling of current circulating coins and banknotes. Good luck stopping people though.
Title: Re: MP High Court Summons RBI, Finance Ministry and eBay for Sale of Coins and Notes
Post by: augsburger on July 18, 2015, 11:48:18 AM
Just put a coin up for the actual cost of the coin, then bid on how much postage and packaging you'd pay.
Title: Re: MP High Court Summons RBI, Finance Ministry and eBay for Sale of Coins and Notes
Post by: EWC on July 18, 2015, 12:02:32 PM
I do not think it would be legal any where in the world to trade in circulation notes and coins at a premium or discount.

Am I missing something here?

UK banks routinely levy charges businesses on both the issue and receipt of coin and notes.

Its a long long time since I was in India - but back then I understood this service was run in the bazaars by private businesses

Machines in UK supermarkets "buy" change at 8.9% discount (called a service fee by the operators, but surely called a rip off by any sane person)
Title: Re: MP High Court Summons RBI, Finance Ministry and eBay for Sale of Coins and Notes
Post by: Pabitra on July 18, 2015, 12:17:22 PM
Only thing you are missing is your understanding of how judicial system works in India.
Title: Re: MP High Court Summons RBI, Finance Ministry and eBay for Sale of Coins and Notes
Post by: EWC on July 18, 2015, 12:21:39 PM
Only thing you are missing is your understanding of how judicial system works in India.

The quote concerned "anywhere in the world".......................
Title: Re: MP High Court Summons RBI, Finance Ministry and eBay for Sale of Coins and Notes
Post by: dheer on July 18, 2015, 02:05:16 PM
Just put a coin up for the actual cost of the coin, then bid on how much postage and packaging you'd pay.

Yep. Or put this in Gift Package. Then sell the package. Its the decoration that you are charging, not the coin or note.
Title: Re: MP High Court Summons RBI, Finance Ministry and eBay for Sale of Coins and Notes
Post by: EWC on July 19, 2015, 12:28:11 PM
Hmmm.  Can someone explain how small change is put into circulation in India these days?  In the UK and I assumed most other places, it is primarily bought at a premium by those with business accounts from the clearing banks, and then given out in change to retail clients.

Well within my lifetime, this service was provided in India by private change booths, who sold change to other businesses at a premium.  Have those change stalls now disappeared?  Do banks provide change to business customers at par?  Are the accounts themselves uncharged?
Title: Re: MP High Court Summons RBI, Finance Ministry and eBay for Sale of Coins and Notes
Post by: dheer on July 19, 2015, 12:53:14 PM
In India its still RBI and Banks.
1. The RBI runs coin counters in its premises,
a] where individuals can get packets [limited] by standing in queue
b] Coin dispensing machines
c] By registering as a large retailer with RBI and getting large number of coins based on request
d] RBI also runs a coin distribution camp on request and takes a Truck load of coins to designated areas in Mumbai / Delhi to distribute coin at face value.

2. Similarly Banks are supposed to run coin counters [each city has such branches identified]

3. All branches have limited exchange.

Title: Re: MP High Court Summons RBI, Finance Ministry and eBay for Sale of Coins and Notes
Post by: EWC on July 19, 2015, 03:12:58 PM
In India its still RBI and Banks.
1. The RBI runs coin counters in its premises,
a] where individuals can get packets [limited] by standing in queue
b] Coin dispensing machines
c] By registering as a large retailer with RBI and getting large number of coins based on request
d] RBI also runs a coin distribution camp on request and takes a Truck load of coins to designated areas in Mumbai / Delhi to distribute coin at face value.
2. Similarly Banks are supposed to run coin counters [each city has such branches identified]
3. All branches have limited exchange.

Many thanks.  I take it the private dealers in change I saw in India in the 1970's have now been put out of business by legislation?

Few private people in the UK would ever need to get change in quantity – I suspect in Europe and the USA the situation is the same  - as a personal customer my bank would provide change informally , as a favour, occasionally, for fairly small quantities. 

Regular demands for substantial amounts, paid in or out would require a business account and would attract a charge – about 1.5% each way as I recall.  My understanding is that has been the case now for at least 50 years in the UK – probably a lot longer.

This gives rise to a bunch of questions – but I will start with just one:

do your large retailers mentioned in c] pay a premium for the change, directly or indirectly?
Title: Re: MP High Court Summons RBI, Finance Ministry and eBay for Sale of Coins and Notes
Post by: dheer on July 19, 2015, 03:35:16 PM
Many thanks.  I take it the private dealers in change I saw in India in the 1970's have now been put out of business by legislation?

The legislation was always there. As to whether private dealers are put out of business ... NO. They are still in business, at times charging 5-8%. Quite a few retailers have started giving out candy for balance small change. Some associations / shops have printed small card/plastic tokens handed out as change.


do your large retailers mentioned in c] pay a premium for the change, directly or indirectly?

There is no direct premium. But the process itself is a premium. They need to get registered with RBI by following the process. Depending on the turn over of an organisation, they are allowed a specific amount of change every month. Then every time they need change, they need to visit the RBI with a letter on company letter head requesting for the change. So there is indirect cost of travelling to RBI center, one persons time for half a day etc. So quite a few innovative small business have gone through the process and invest the time and effort get the coins from RBI and then distribute locally to various shops for fees.
Title: Re: MP High Court Summons RBI, Finance Ministry and eBay for Sale of Coins and Notes
Post by: EWC on July 19, 2015, 05:11:24 PM
The legislation was always there. As to whether private dealers are put out of business ... NO. They are still in business, at times charging 5-8%.

Many thanks again.  Afraid I am still unclear. 

Are you saying charging a premium for change is illegal, but the law is openly flouted?
Title: Re: MP High Court Summons RBI, Finance Ministry and eBay for Sale of Coins and Notes
Post by: Coinsforever on July 19, 2015, 06:39:58 PM
What I understood here is main reason  for  such  petition  was last Rajkot exhibition.

3 issues are
1.Republic India currency notes
2.Republic India  circulating & commemorative  coins being sold at premiums
3.Fake coins at 3 sites.

I don't think that either PM or finance ministry will  intervene.
Further more ebay india and other had been clearly discouraging for sale of any fake products  on papers at least, but failed to control.

I don't think it matters a lot to collectors because it is all happening due to various groups who have business  rivalries results into such mess.

Cheers  ;D
Title: MP High Court Summons RBI, Finance Ministry and eBay for Sale of Coins and Notes
Post by: Bimat on July 20, 2015, 06:39:05 AM
illegal, but the law is openly flouted?

Yes! If you visit RBI head office in South Mumbai, you will have to stand in queue for 3-4 hours and there's a restriction on number of bags you can get for face! (I guess less than 5 per person?) So in nearby areas of RBI itself, you can buy as many bags of coins for a premium (typically 10-15%) if you know the correct person. Most of the small hotels, general stores get their change this way.

Aditya
Title: Re: MP High Court Summons RBI, Finance Ministry and eBay for Sale of Coins and Notes
Post by: dheer on July 20, 2015, 07:04:40 AM
Are you saying charging a premium for change is illegal, but the law is openly flouted?

Yes it is illegal. Whether its openly flouted or overtly flouted is interpretation  ;D.
Title: Re: MP High Court Summons RBI, Finance Ministry and eBay for Sale of Coins and Notes
Post by: dheer on July 20, 2015, 07:06:26 AM
Yes! If you visit RBI head office in South Mumbai, you will have to stand in queue for 3-4 hours and there's a restriction on number of bags you can get for face! (I guess less than 5 per person?) So in nearby areas of RBI itself, you can buy as many bags of coins for a premium (typically 10-15%) if you know the correct person. Most of the small hotels, general stores get their change this way.

Aditya

I have been to RBI in South Mumbai, for ordinary person you stand in a queue for whatever time. I guess I stood around 15 mins once and 45 mins the other time. Generally you get one bag. The denomination is also decided by the mood of the teller at the counter.
Title: Re: MP High Court Summons RBI, Finance Ministry and eBay for Sale of Coins and Notes
Post by: Coinsforever on July 20, 2015, 07:11:30 AM
There are infinite numbers of illegal activities happening but for  numismatic world such activities  are being  exposed more openly. Anti groups intend to create such  exposure while other intend to defend.

Alike every business its a dealers war created by themselves.

Cheers  ;D
Title: MP High Court Summons RBI, Finance Ministry and eBay for Sale of Coins and Notes
Post by: Bimat on July 20, 2015, 07:14:38 AM
I have been to RBI in South Mumbai, for ordinary person you stand in a queue for whatever time. I guess I stood around 15 mins once and 45 mins the other time. Generally you get one bag. The denomination is also decided by the mood of the teller at the counter.

45 minutes? Guess they have improved the service then. ;) But it it's only one bag per person, then it's not worth the money and time spent. For example, if I decide to visit RBI head office from where I live, I'll have to spend about 70-80 rupees on transport (including railway ticket) plus over 3 hours for two way journey by crowded train. Add to that one hour in queue. Grrr...

Few years ago when I was in Republic India coins, I got couple of bags of commemorative coins with the help of one of my relative. She was (is) in RBI and she happened to be in currency handling department at that time. ;D She even brought a bundle of Rs 5 banknotes for me, all for face and absolutely no efforts involved for anyone! I then lost interest in RI coins, she got promotion and became manager and transferred to old RBI head office. :) She knows all the tricks dealers use to get coins, fancy number of notes etc etc...

Aditya
Title: Re: MP High Court Summons RBI, Finance Ministry and eBay for Sale of Coins and Notes
Post by: Pabitra on July 20, 2015, 07:57:07 AM
Yes! If you visit RBI head office in South Mumbai, you will have to stand in queue for 3-4 hours and there's a restriction on number of bags you can get for face! (I guess less than 5 per person?) So in nearby areas of RBI itself, you can buy as many bags of coins for a premium (typically 10-15%) if you know the correct person. Most of the small hotels, general stores get their change this way.

Aditya

The dealers used to collect a team of queue standees who would make several visits by standing in queue and getting bags. On a typical day, this would make a person collect 8- 10 bags and make one days livelihood in 5 hours. Now that is over.
Title: MP High Court Summons RBI, Finance Ministry and eBay for Sale of Coins and Notes
Post by: Bimat on July 20, 2015, 08:56:17 AM
The dealers used to collect a team of queue standees who would make several visits by standing in queue and getting bags. On a typical day, this would make a person collect 8- 10 bags and make one days livelihood in 5 hours. Now that is over.

I'm not sure but I think you have to provide PAN details, so the same person can't stand in the queue twice...

Aditya
Title: Re: MP High Court Summons RBI, Finance Ministry and eBay for Sale of Coins and Notes
Post by: Pabitra on July 20, 2015, 08:57:25 AM
That was not so about 5 years back
Title: Re: MP High Court Summons RBI, Finance Ministry and eBay for Sale of Coins and Notes
Post by: Abhay on July 20, 2015, 09:54:55 AM
Will the next step be banning of Sale of Stamps on the Ebay or Auctions? Going by the same logic, all the postal stamps issued till date, are still legal and can be used for postal purpose at the face value.

So is it going to be the end of the old Hobbies like Philately and Numismatic just because some stupid persons, who have never collected any coins or stamps themselves, nor have encouraged their children to do so, have gone to the courts asking for the Ban?

Abhay
Title: MP High Court Summons RBI, Finance Ministry and eBay for Sale of Coins and Notes
Post by: Bimat on July 20, 2015, 10:00:31 AM
Will the next step be banning of Sale of Stamps on the Ebay or Auctions? Going by the same logic, all the postal stamps issued till date, are still legal and can be used for postal purpose at the face value.

So is it going to be the end of the old Hobbies like Philately and Numismatic just because some stupid persons, who have never collected any coins or stamps themselves, nor have encouraged their children to do so, have gone to the courts asking for the Ban?

Yeah, exactly the reason why I'm interested in the verdict. It may not come anytime soon though.

If the verdict is in petitioner's favor, it may well give more opportunities to mints to make money though, as they can issue each and every coin in blister for a hefty premium... :-\

Aditya
Title: Re: MP High Court Summons RBI, Finance Ministry and eBay for Sale of Coins and Notes
Post by: dheer on July 20, 2015, 10:23:26 AM
Will the next step be banning of Sale of Stamps on the Ebay or Auctions? Going by the same logic, all the postal stamps issued till date, are still legal and can be used for postal purpose at the face value.
Abhay

Sorry I didn't realize selling of stamps above face value was illegal.
Title: Re: MP High Court Summons RBI, Finance Ministry and eBay for Sale of Coins and Notes
Post by: EWC on July 20, 2015, 11:31:59 AM
Many thanks indeed for all the clarifications!  Questions about small change have interested me for about 30 years, and have become quite big topics in numismatic theory for about the last 15 years – I am thinking about two books – one sponsored by the US Federal Reserve Bank, and written by a Nobel laureate (Sargent, “The Big problem of Small Change”) which I think is crazy, and one sponsored by the “far right” association Cato (written by Selgin “Good Money”) which I think is sophisticated but deeply biased.

Anyhow - as far as I can tell - the sort of problems reported in India today with small change have not raised their head in England since about 1880 – although they were certainly going on in Italy in the 1970’s.

To be honest, I never got to the bottom of the c. 1880 event in England, nor what was going on in Italy in the 1970’s, so I do not suppose its easy to understand what is going on today in India – but I would welcome any thoughts.

What seems to happen today in the UK is the mint swamps the system with huge amounts of small change.  My assumption is that the mint fixes manufacturing costs below face value, and the total value of change is so small compared to the money supply that they are allowed to move out very big supplies indeed.  Am open to correction on that – but if it is correct – why does India not do the same?

Whilst on this topic – I heard a strange story about France about 10 years back.  I wonder if anyone can clarify the charges a business will face paying small change into a bank in France?
Title: Re: MP High Court Summons RBI, Finance Ministry and eBay for Sale of Coins and Notes
Post by: dheer on July 20, 2015, 01:51:45 PM
What seems to happen today in the UK is the mint swamps the system with huge amounts of small change.  My assumption is that the mint fixes manufacturing costs below face value, and the total value of change is so small compared to the money supply that they are allowed to move out very big supplies indeed.  Am open to correction on that – but if it is correct – why does India not do the same?

There are multiple issues.
Quite some years back it was the quantity being minted, capacity of mints. However today the capacity is there. It is partly now a distribution problem. i.e. Government is finding it hard to distribute to right places. Banking has changed and now there are private banks who do not want to deal in small coins as they are cost and don't generate any profits.
Further inflation is faster and eroding real value of quite a few denominations. This puts pressure on old coins that are being melted away. Developed countries with small inflation do not have this issue. So once a coin is minted, it exists for long. The recent example of melting was the steel Rs 5 coins introduced in 2007-2008, were melted in Bangladesh to make shaving blades. The metal got changed to Nickel-Brass.

Add is quite a few younger India is moving towards electronic payments and no longer carry small change in pockets, whatever they get is thrown away in a jar at home. So the amount of coins in peoples home has increased substantially. There is also a absence of coin sorters / changers in malls/banks for individuals to periodically put the old coins and get notes.
Title: Re: MP High Court Summons RBI, Finance Ministry and eBay for Sale of Coins and Notes
Post by: EWC on July 21, 2015, 10:06:11 AM
Add is quite a few younger India is moving towards electronic payments and no longer carry small change in pockets, whatever they get is thrown away in a jar at home. So the amount of coins in peoples home has increased substantially.

Yes - The amount in jars in the UK must be vast

There is also a absence of coin sorters / changers in malls/banks for individuals to periodically put the old coins and get notes.

As far as I can tell, change machines in the UK charge 8.9% - but (disgracefully) that does not seem to be clearly marked on them.  I do not think many people use them though – perhaps just an instinctive (and in this case correct) distrust

Your point on inflation is a valid one I had not thought of.  But there is another matter that seems a possible to me.

Around 1880 huge numbers of French 10 centime pieces were imported into the UK from France.  There was a shortage of copper pennies - especially used to pay London Hackney carriage fares apparently.  Questions were raised in parliament and a reform was promised.  But if you look at the mintage figures, the amount of small change did not much increase.  Pennies volumes were increased at the expense of halfpennies and farthings.  So it appears to me there was some unmentioned limiting factor in play.

My guess attaches to the fact that a well known UK retailer – Marks and Spencer – is very proud of the fact it started life on Leeds Market as an “anything for a penny” stall around 1880.  A retail phenomenon not unlike the rise of Woolworths in the 1930’s (by then anything for 6d) and the rise of pound shops today.

But if there was a big rise in 1d stalls on markets around 1880, this may well have been associated with an increase in tax avoidance, and the authorities might possibly have back peddled on small change as a blunt weapon against such tax avoidance.

VAT collection was very aggressive in the UK in the 1970’s, and contributed to the near collapse of the small independent shop keeper in most sectors – the sort of person who traditionally would find it easy to use cash to avoid tax.  High streets here are now dominated by chains, and tax avoidance is arranged by lawyers and has little to do with operations close to the till.  But the India I recall still had an awful lot of small retail enterprises………
Title: Re: MP High Court Summons RBI, Finance Ministry and eBay for Sale of Coins and Notes
Post by: asm on July 22, 2015, 05:22:03 AM
Sorry I didn't realize selling of stamps above face value was illegal.
Not sure Dheer. For notes,itis as an RTI query had revealed.

Amit
Title: MP High Court Summons RBI, Finance Ministry and eBay for Sale of Coins and Notes
Post by: Bimat on July 23, 2015, 11:42:06 AM
I have been informed that Indore Coin Society will argue on behalf of collectors in MP High Court.

Also, many of the collectors who had written to PMO regarding this have got acknowledgment from PMO saying that their request has been forwarded for further action.

Aditya
Title: Re: MP High Court Summons RBI, Finance Ministry and eBay for Sale of Coins and Notes
Post by: dheer on July 23, 2015, 04:51:25 PM
I have been informed that Indore Coin Society will argue in behalf of collectors in MP High Court.

Also, many of the collectors who had written to PMO regarding this have got acknowledgment from PMO saying that their request has been forwarded for further action.

Aditya

Looks like some good news.
Title: MP High Court Summons RBI, Finance Ministry and eBay for Sale of Coins and Notes
Post by: Bimat on August 08, 2015, 09:19:32 AM
The first hearing of the case took place yesterday. All three companies and RBI requested high court a 4 weeks' time for answer, which court agreed. Next hearing in next month...

Aditya
Title: MP High Court Summons RBI, Finance Ministry and eBay for Sale of Coins and Notes
Post by: Bimat on July 14, 2016, 04:15:30 PM
In recent hearing, government informed HC that RBI may consider making a new law which will ban selling of currency at a premium. No further developments, wait for next hearing to happen. ;)

Aditya
Title: MP High Court Summons RBI, Finance Ministry and eBay for Sale of Coins and Notes
Post by: Bimat on February 11, 2017, 07:47:10 AM
On Thursday, RBI informed MP High Court that under any circumstances, it is illegal to sell legal tender coins or banknotes for a premium (online or any other means). However, there's no law which prohibits people from doing so and finance ministry (i.e. parliament) may amend the law(s) as necessary. Since no official from finance ministry was present during the argument, high court has reserved the decision on this matter.

Aditya
Title: Re: MP High Court Summons RBI, Finance Ministry and eBay for Sale of Coins and Notes
Post by: EWC on February 11, 2017, 09:42:17 AM
On Thursday, RBI informed MP High Court that under any circumstances, it is illegal to sell legal tender coins or banknotes for a premium (online or any other means). However, there's no law which prohibits people from doing so and finance ministry (i.e. parliament) may amend the law(s) as necessary. Since no official from finance ministry was present during the argument, high court has reserved the decision on this matter.

I think understand why this is going on - due to very high charges levied for change - and the legitimate wish to stamp that out

But are ALL charges to be prohibited?  How would that work?

I believe standard charges in the UK between customers and banks are in the 1% to 1.5% range (in or out) - which seems legitimate in contexts where branches have to cope with a lot of say slot machine traders, with a lot of heavy lifting in and out the vaults and vans. 

Even in the UK its rather a rip off if the transactions are 50 pound notes.........

Rob

BTW  Anyone with a serious interest in small change might find this interesting:

https://www.academia.edu/31132451/Maria_Graham_and_the_Politics_of_Small_Change

Title: Re: MP High Court Summons RBI, Finance Ministry and eBay for Sale of Coins and Notes
Post by: dheer on February 11, 2017, 11:24:31 AM
On Thursday, RBI informed MP High Court that under any circumstances, it is illegal to sell legal tender coins or banknotes for a premium (online or any other means). However, there's no law which prohibits people from doing so and finance ministry (i.e. parliament) may amend the law(s) as necessary.

Aditya

If there is no law, how is it illegal  ???
Title: MP High Court Summons RBI, Finance Ministry and eBay for Sale of Coins and Notes
Post by: Bimat on February 11, 2017, 01:38:32 PM
If there is no law, how is it illegal  ???

I think what they mean is there is no provision of punishment to those who are selling legal tender coins/banknotes for a premium.

This also means that coins which are part of proof sets/single coin sets issued by the four Indian mints are NOT legal tender, since they are surcharged!

Aditya
Title: MP High Court Summons RBI, Finance Ministry and eBay for Sale of Coins and Notes
Post by: Bimat on February 14, 2017, 04:13:57 PM
As promised elsewhere, here's my answer to Rob's question(s) :). There are two parts of it: First not exactly what Rob wanted to know, second, some recent developments after the demonetization decision by the government.

Part I:

The petition in the MP high court has nothing to do with demonetization, government asking people to pay some particular amount in case they want to deal in (high amount) of cash. The petition was filed much before demonetization was announced.

At one of the coin exhibition in Indore, someone saw dealers selling fancy number banknotes and commemorative coins (both legal tender) for a premium. He was curious to know if it was legal, and hence he approached RBI and also filed a complaint in police. It eventually resulted in a court case, proceedings of which are now with us.

The case itself has nothing related to government's role in distributing cash, charging for it etc. It solely deals with whether it is allowed to sell legal tender currency for a premium or not, if not, what's the punishment.

Part II:

After the demonetization decision was announced on November 8 of last year, there was an acute shortage of cash in the entire country, as almost 86% of the total cash became illegal tender. Indian currency presses did not have enough printing capacity to meet with the demand, which resulted in some undesirable consequences (discussed elsewhere already).

When the situation became bad, government suddenly started promoting cashless economy, which later turned into a less cash economy kind of thing.

Now comes the answer to your question.

Before demonetization, most of the banks (except a few private banks) did not charge any commission for withdrawing any amount from the bank (ATM or at the counter). Nor there was any restriction on cash transaction. Post demonetization, situation has changed significantly. Many private banks have increased transaction cost for high amount withdrawals (typically if the amount is above ₹150,000) from the counter. Also, the budget which was presented a couple of weeks back has imposed a 100% fine on cash transactions above ₹300k. When asked about how it is going to be implemented, the finance minister told that the receiver of the cash (more than ₹300k) will pay 100% fine in case found with dealing in excessive cash. For example, if a builder asks me to pay ₹1000k in cash and he's caught, he will have to pay a fine of ₹1000k to the government. The loophole in this system is that government relies entirely on the person who is giving him cash. Which means, if I register a complaint against the builder, then only IT department will take up the matter. If both the parties are fine with dealing in any amount of cash, then there's nothing which can really stop you from doing so. ::) So to me, it appears that the new law will not be very successful in reducing cash transactions.

Hope that somewhat answers your question? ;)

Aditya
Title: Re: MP High Court Summons RBI, Finance Ministry and eBay for Sale of Coins and Notes
Post by: EWC on February 15, 2017, 12:27:48 PM
Many thanks Bimat for all this effort.   :)

Unfortunately it rather missed my key point.     :'(

It all gotten a bit complicated  - but give me a little time and I will try again 

Rob T
Title: Re: MP High Court Summons RBI, Finance Ministry and eBay for Sale of Coins and Notes
Post by: EWC on February 15, 2017, 09:06:40 PM
OK lets start at the beginning

Before demonetization, most of the banks (except a few private banks) did not charge any commission for withdrawing any amount from the bank (ATM or at the counter).

In the UK ordinary bank customers do not much need small change from the bank, and when they do need small amounts the bank will I think just pay it over.  Business customers however pay a transaction charge on all cash going into the bank or going out.  Typically 1% or 1.5%.  And this is not a new thing I think - as I understand it this was the case 50 years back, and probably much longer still.

When I travelled overland to India in 1978 I read an unofficial guide book which suggested getting hold of bags of small change before travelling to Ladakh - since one could sell it for a profit there.  I was not interested in making a profit – I just thought it was numismatically rather interesting.  I never found out if it was true while in India, but of course I saw many people ran businesses selling small change in markets etc.

Some time later I gave a talk (it was to the Oxford University Numismatic club) and mentioned something about the matter.  The late Prof Spencer Smith (a coin collector and expert on Butterflies) took and interest, and delved into the matter on his next trip to Pakistan.  He walked into a bank and asked to get some bags of small change.  They could not or would not give him any, and told him he had to go buy it in the Bazaar.  Of course that should not be a surprise, why would people make a living selling it in bazaars if you could get it free, or cheaply, in a bank?  But it raises all sorts of questions, about how coin gets distributed in the economy, if, unlike the UK one cannot just walk into a bank and buy it at a cheap fixed price (1% or so)

Actually I raised this before on this group , and a member kindly informed me that quite a high premium is still charged by professional people who deal in cash/small change, but that the government is trying to stamp it out (?)

This sort of problem is by no means particular to the sub-continent.  Travelling through Italy in 1978 there was no small change at all, I was given sweets instead at shop counters!

So as things stand I think your statement above perhaps misleads? On the information I have, if bank commission has not been charged on paying out cash (in the form of small change) is it perhaps because often no small change was being paid out at all, in a routine sort of way?

Anyhow, I am not claiming of course to know what is going on!!!  Just trying to clarify my original question, which I repeat below

If the high court is trying to fix it so that there is no transaction charge on cash, it seems to me, from a British perspective, a rather strange thing to do, as such a (modest) charge is standard practice here, and does legitimately cover genuine costs in paying, holding, storing and transporting the physical product.  So - how does ithe high court propose these costs are met?

Rob T


Title: Re: MP High Court Summons RBI, Finance Ministry and eBay for Sale of Coins and Notes
Post by: dheer on February 16, 2017, 02:06:40 AM
It is like you have mentioned.

Business pay a fee for cash deposits. Generally there is none for withdrawal.

Small change is cost to bank and hence they are not encouraged to handle it. Banks can't charge for giving small change, Coins.

There is industry that runs on selling this at premium of 5% or 8% depending on denomination of coins.

The case in court is selling fancy notes or coins in market place at high price. If RBI that it is legal, then it is admitting that it currency is a commodity. People can buy or sell at price higher or lower than face value. The promise to pay nature take a beating.