World of Coins

Modern Asian coins, pseudo coins and trade tokens => India post 1947 => Topic started by: andyg on September 30, 2018, 08:44:09 PM

Title: Legal Tenders
Post by: andyg on September 30, 2018, 08:44:09 PM
Notes from Moderator:
This topic has been split off from http://www.worldofcoins.eu/forum/index.php/topic,43608.0.html
If any reference is needed please read the above topic.


Well, proof coins are not legal tenders, so by faking, no one will jeopardize the economy. The price at which these coins are being sold is not that much and the market is also not that big ( proof coins are not mobile phones). So why will the Chinese people take that much trouble of sending fake proof coins over the Himalayas?

These fakes are not to jeopardise the economy - but to sell to collectors.  They will cost a few Rupees to be made and the seller can make a profit selling them to unsuspecting collectors.
Title: Re: Legal Tenders
Post by: EWC on October 01, 2018, 08:21:31 AM
Well, proof coins are not legal tenders, so by faking, no one will jeopardize the economy. The price at which these coins are being sold is not that much and the market is also not that big ( proof coins are not mobile phones). So why will the Chinese people take that much trouble of sending fake proof coins over the Himalayas?

Your question seems to me to contain implicit premisses, thus :

A)   People are rational

B)  Chinese forgers are people

C)  It would not be rational to make fakes of the postulated type

Thus C) would contradict A)

I suggest you think further concerning this suggestion from Bertrand Russell:

“Man is a rational animal. So at least we have been told. Throughout a long life I have searched diligently for evidence in favour of this statement.
So far, I have not had the good fortune to come across it.”

Rob T
Title: Re: Legal Tenders
Post by: Rabi_R on October 01, 2018, 10:45:25 AM
Your question seems to me to contain implicit premisses, thus :

A)   People are rational

B)  Chinese forgers are people

C)  It would not be rational to make fakes of the postulated type

Thus C) would contradict A)

I suggest you think further concerning this suggestion from Bertrand Russell:

“Man is a rational animal. So at least we have been told. Throughout a long life I have searched diligently for evidence in favour of this statement.
So far, I have not had the good fortune to come across it.”

Rob T

I shall start my response with a  :like:

Having said that, i suggest you to consider these facts -
1) Price i have paid for this coin is not more than the cost of a family pizza in my country
2) If you go through the sites of Indian mints, you will find coins released two years ago are still being sold. From this we can guess how big the market for proof coins is.
Title: Re: Legal Tenders
Post by: kansal888 on October 02, 2018, 02:43:11 AM
Well, proof coins are not legal tenders, so by faking, no one will jeopardize the economy.
Dear Friends

In my opinion proof and unc coins issued by Indian mints are legal tenders.

1) These coins are issued under Coinage Act of India.

2) Each theme / subject is approved by Ministry of Finance at highest level before issuance (including designs, denomination, size and metal composition)

3) A Gazette Notification is issued for Proof/ Unc  coins by Govt of India.

4) Gazette Notification is laid in both the houses of Parliament - Lok Sabha as well as Rajya Sabha

Proof coins of India falls under what is popularly called as NCLT i.e. Non Circulating Legal Tenders

Regards
Sanjay Kansal
Title: Re: Legal Tenders
Post by: Rabi_R on October 02, 2018, 05:20:20 AM
Dear Friends

In my opinion proof and unc coins issued by Indian mints are legal tenders.

1) These coins are issued under Coinage Act of India.

2) Each theme / subject is approved by Ministry of Finance at highest level before issuance (including designs, denomination, size and metal composition)

3) A Gazette Notification is issued for Proof/ Unc  coins by Govt of India.

4) Gazette Notification is laid in both the houses of Parliament - Lok Sabha as well as Rajya Sabha

Proof coins of India falls under what is popularly called as NCLT i.e. Non Circulating Legal Tenders

Regards
Sanjay Kansal

1) Not all coins issued under Coinage Act are legal tenders, but coins issued only under specific sections are legal tenders.
2) A legal tender can have only one value, it's face value. This face value, in turn, is pegged to the US dollar. So if at the time of writing, rupee dollar exchange rate is 70:1, then a 10 rupees legal tender coin is worth 0.142 dollars, nothing more, nothing less.
Now if mints are asking me to pay 3000/- rupees for a 100 rupees proof coin, that cannot be legal tender.
If proof coins are legal tenders, price list in mint sites would have looked like currency rate boards.



Happy Gandhi Jayanti



P.S -  Admin/moderator may consider moving this to a new thread.
Title: Re: Legal Tenders
Post by: quaziright on October 02, 2018, 05:49:23 AM
I’ve been reading this thread with quite a bit of amusement. The OP is quite something in terms of reactions to all those who commented with what I can only assume was in the spirit of helping answer the original question. I don’t know specifics of Indian coins, but I was quite surprised by the claim in the post above that the INR is pegged to the dollar. Unlike the GCC, India manages a floated échange rate that’s not pegged to any one currency, though of course the US dollar along with the euro, pound sterling, CHF and other currencies would constitute a significant influencing factor.

As per wiki..
Officially, the Indian rupee has a market-determined exchange rate. However, the RBI trades actively in the USD/INR currency market to impact effective exchange rates. Thus, the currency regime in place for the Indian rupee with respect to the US dollar is a de facto controlled exchange rate. This is sometimes called a "managed float". Other rates (such as the EUR/INR and INR/JPY) have the volatility typical of floating exchange rates, and often create persistent arbitrage opportunities against the RBI.[54] Unlike China, successive administrations (through RBI, the central bank) have not followed a policy of pegging the INR to a specific foreign currency at a particular exchange rate. RBI intervention in currency markets is solely to ensure low volatility in exchange rates, and not to influence the rate (or direction) of the Indian rupee in relation to other currencies.[55
https://en.m.wikipedia.org/wiki/Indian_rupee

 It seems time and again the OP has got his facts wrong. Nevertheless, the thread is indeed turning out to be informative in terms of reading this laborious process of defining when a coin is or is not issued besides other tangential  topics
Title: Re: Legal Tenders
Post by: Rabi_R on October 02, 2018, 07:27:45 AM
Since this is an informal discussion going on in an online forum, the usage of the term "pegged" should have been construed in a more loose sense rather than the strict sense in which it has been. More so because, the common perception, world wide, since Bretton-Woods, is that USD is the new gold.
Title: Re: Legal Tenders
Post by: Pabitra on October 02, 2018, 08:19:03 AM
Unlike the GCC, India manages a floated échange rate that’s not pegged to any one currency, though of course the US dollar along with the euro, pound sterling, CHF and other currencies would constitute a significant influencing factor.

Wrong.
Pegging is like two sides of a coin.
In case of GCC ( specifically AED), it is Central Bank of Emirates which maintains the pegging. US Federal Bank does not play any role.
On the other hand, stronger currencies do maintain the peg with seemingly weak currencies.
There was a time after WW II, when Federal Bank maintained the pegging of Japanese Yen, as a part of commitment made after Allied Victory.
Similarly, France agreed to maintain the peg for West African States Franc as well as Central African States Franc, to maintain the integrity of the monetary unions.

Now coming to specific INR. India maintains pegging of Rupee with Bhutan Ngultrum at 1:1 as well as with Nepal Rupee at 100:160.
Title: Re: Legal Tenders
Post by: dheer on October 02, 2018, 09:16:52 AM
1) Not all coins issued under Coinage Act are legal tenders, but coins issued only under specific sections are legal tenders.
2) A legal tender can have only one value, it's face value. This face value, in turn, is pegged to the US dollar. So if at the time of writing, rupee dollar exchange rate is 70:1, then a 10 rupees legal tender coin is worth 0.142 dollars, nothing more, nothing less.
Now if mints are asking me to pay 3000/- rupees for a 100 rupees proof coin, that cannot be legal tender.
If proof coins are legal tenders, price list in mint sites would have looked like currency rate boards.



Happy Gandhi Jayanti



P.S -  Admin/moderator may consider moving this to a new thread.

1. Can you quote the section from coinage act.
2. INR like most currencies is a fiat (https://en.m.wikipedia.org/wiki/Fiat_money). Exchange rate is different, it can be pegged, regulated or market driven.
Title: Re: Legal Tenders
Post by: Rabi_R on October 02, 2018, 09:43:40 AM
"The coins issued under the authority of section 4 shall be a legal tender in payment or
on account...."

PDF of Coinage Act is available online. You may go through the entire act.
Title: Re: Legal Tenders
Post by: dheer on October 02, 2018, 10:47:51 AM
"The coins issued under the authority of section 4 shall be a legal tender in payment or
on account...."

PDF of Coinage Act is available online. You may go through the entire act.

In my view you are misreading the section 6. It is only giving out the limit as to when I can give coins. i.e. if I have to pay someone Rs 10,000/- I can't force him 20,000 coins of 50 paise.

Section 4 clearly says coins can be minted upto the denomination of Rs 1000. It does not distinguish between Circulating Legal Tender and Non Circulating Legal Tender (https://en.wikipedia.org/wiki/Non-circulating_legal_tender).
Title: Re: Legal Tenders
Post by: EWC on October 02, 2018, 11:22:13 AM
Since this is an informal discussion going on in an online forum, the usage of the term "pegged" should have been construed in a more loose sense rather than the strict sense in which it has been. More so because, the common perception, world wide, since Bretton-Woods, is that USD is the new gold.

Loosely speaking - I agree.

But I think the important thing to bear in mind that precious metal probably started to became prominent as a money form before 2,800 BC, and ceased, rather exactly in the UK I would claim, in 1947.

Thus the current experiment is hardly any older than I am! 

On the specific matters of NCLT  etc - perhaps this is of interest? 

(Its widely assumed the Japanese gvt settled out of court.  But - what do I know?  ;)  )

https://taxfreegold.co.uk/japanchrysanthemumcoinsaffair.html

Rob T
Title: Re: Legal Tenders
Post by: Rabi_R on October 02, 2018, 12:32:23 PM
In my view you are misreading the section 6. [/url].

I am not reading Section 6 at all. I am reading Section 4 and that Section has enough clue. The Act doesn't attempt to differentiate Legal Tender and Non Circulating Legal Tender because NCLT is a misnomer. A legal tender is currency that must be accepted if offered in payment of debt. So what is NCLT? Married bachelor?
Title: Re: Legal Tenders
Post by: dheer on October 02, 2018, 01:05:16 PM
The text you have pasted is from section 6,

QUOTE
1) The coins issued under the authority of section 4 shall be a legal tender in payment or on account, in case of--
(a) a coin of any denomination not lower than one rupee, for any sum not exceeding one thousand rupees;

UNQUOTE
It is not to be read as coins issued under section 4 are legal and coins issued under other are not.
It means that coins can only be used to repay a debt of rs 1000.
Title: Re: Legal Tenders
Post by: quaziright on October 02, 2018, 01:34:49 PM
Wrong.
Pegging is like two sides of a coin.
In case of GCC ( specifically AED), it is Central Bank of Emirates which maintains the pegging. US Federal Bank does not play any role.
On the other hand, stronger currencies do maintain the peg with seemingly weak currencies.
There was a time after WW II, when Federal Bank maintained the pegging of Japanese Yen, as a part of commitment made after Allied Victory.
Similarly, France agreed to maintain the peg for West African States Franc as well as Central African States Franc, to maintain the integrity of the monetary unions.

Now coming to specific INR. India maintains pegging of Rupee with Bhutan Ngultrum at 1:1 as well as with Nepal Rupee at 100:160.

Wow, I suppose a coin collector doesn’t really need a basic grasp of economics to be in this hobby. So here’s a link which can be useful for you explaining why countries peg their currencies to the dollar and the mechanics of how they do it.
https://www.thebalance.com/what-is-a-peg-to-the-dollar-3305925

Here’s a newspaper article that talks about the Nepalese Peg
https://www.bestcurrentaffairs.com/nepal-pegged-currency-indian-rupee/

The French West African and Japanese examples are exceptional circumstances. In both cases, it was/is foreign governments directing the monetary policy of countries that they occupied or formerly controlled. The discussion here is about sovereign countries who maintain independent monetary authority but may voluntarily choose to pegg their currency to a global currency like the Dollar.
Title: Re: Legal Tenders
Post by: quaziright on October 02, 2018, 01:41:07 PM
Since this is an informal discussion going on in an online forum, the usage of the term "pegged" should have been construed in a more loose sense rather than the strict sense in which it has been. More so because, the common perception, world wide, since Bretton-Woods, is that USD is the new gold.

Maybe it’s a cultural thing, but if you are talking about a subject that is relatively technical such as the definition of legal tender, then you should know how to use technical language accordingly. When you talk about a “peg” in the context of currencies, it has but one meaning, “fixed exchange rate”.

Moreover, there are 193 countries in the UNO, with more than 60 that maintain a peg with the US, around 25 with the Euro, 2 with India etc. That still leaves a large part of the world with market based floated convertible currencies.

It’s also a cultural thing from where I come from that if you make a mistake, there’s no harm in acknowledging it and we all learn and move forward ;)
Title: Re: Legal Tenders
Post by: Rabi_R on October 02, 2018, 02:46:08 PM
The text you have pasted is from section 6,



The text mentions Sec 4, right? It was taken from Sec 6 because there is a correlation that explains why proofs are not legal tenders.
Following extracts from the two sections should give you some more hint -
"Coins may be minted at the mints......." - Sec 4
"Coins issued under the authority of section 4......." - Sec 6

I also told you to read the Act in it's entirety. I had a reason. There is clue to be found in the definition section.
Title: Re: Legal Tenders
Post by: Rabi_R on October 02, 2018, 03:03:13 PM
Maybe it’s a cultural thing, but if you are talking about a subject that is relatively technical such as the definition of legal tender, then you should know how to use technical language accordingly. When you talk about a “peg” in the context of currencies, it has but one meaning, “fixed exchange rate”.

Moreover, there are 193 countries in the UNO, with more than 60 that maintain a peg with the US, around 25 with the Euro, 2 with India etc. That still leaves a large part of the world with market based floated convertible currencies.

It’s also a cultural thing from where I come from that if you make a mistake, there’s no harm in acknowledging it and we all learn and move forward ;)

If you had read my comment carefully, you would have noticed just after writing "pegged", i have written "at the time of writing",the two contradicts each other. Therefore, the conclusion is, "pegged" was not used in it's strictest sense.
It is also a cultural thing from where i come from, nitpicking is generally laughed at.
Title: Re: Legal Tenders
Post by: quaziright on October 02, 2018, 03:11:12 PM
That’s quite funny indeed considering you were nitpicking on someone else’s comment about some Commemorative coin relating to spelling of a proper noun (something about Jaganath). Anyways, there’s nothing further to contribute from my end as far as this topic is concerned. People will read this and the other discussions and draw their own learnings; that for me is enough. So I’ll stop here!
Title: Re: Legal Tenders
Post by: Rabi_R on October 02, 2018, 03:19:37 PM
That was about identifying a fake. The original and fake have different spellings. If you find these two situations analogous then i can't but appreciate you sense of logic. Actually i am mincing words here because i am not a native English speaker. I would have enjoyed this even more in my mother tongue.
Title: Re: Legal Tenders
Post by: kansal888 on October 02, 2018, 03:44:04 PM
1) Not all coins issued under Coinage Act are legal tenders, but coins issued only under specific sections are legal tenders.

Dear friend

Can you please explain coins issued under which section of the Coinage Act are legal tenders and coins issued under which section are not legal tenders?

Regards
Sanjay Kansal
Title: Re: Legal Tenders
Post by: Rabi_R on October 02, 2018, 04:04:06 PM
Dear friend

Can you please explain coins issued under which section of the Coinage Act are legal tenders and coins issued under which section are not legal tenders?

Regards
Sanjay Kansal

Dear friend,
Matter is not like black and white and nothing in between. See, this Act has a specific definition of "issue". Not in the general sense we used the term today morning. Issue means " to put a coin into circulation for use as money".
 Section 6 states "Coins issued under the authority of Section 4 shall be a legal tender" Thereafter types of legal tender are defined, which we need not discuss.
Now let's go to Section 4. Section 4 starts with the following words - "Coins may be minted at the Mints...." This is the only instance in the entire act where it has been stated what is to be done at the mint. Selling of proof coins by mints are not mentioned anywhere in the Act. Neither does Section 4 mention the mints as issuing authority.
 So it is clear that the selling of proof coins by mints does not come under the purview of the Coinage Act. Now any activity by any individual, institution or authority that is not covered by the Coinage Act has nothing to do with legal tenders. Therefore, coins issued by RBI are legal tenders and coins sold by mints are not, although both have been minted as per provisions of Coinage Act.
Title: Re: Legal Tenders
Post by: kansal888 on October 02, 2018, 04:57:47 PM
Dear friend,
... So it is clear that the selling of proof coins by mints does not come under the purview of the Coinage Act. Now any activity by any individual, institution or authority that is not covered by the Coinage Act has nothing to do with legal tenders. Therefore, coins issued by RBI are legal tenders and coins sold by mints are not, although both have been minted as per provisions of Coinage Act.

Dear Friend

Your interpretation of the Coinage Act is faulty. In fact Coinage Act does not make any distinction between coins issued by RBI and coins sold by mints.

It is clear in Section 2 (definitions) read along-with other Sections of the Coinage Act that coins are legal tenders:

Quote:
(a) "coin" means any coin which is made of any metal or any other material
stamped by the Government or any other authority empowered by the
Government in this behalf and which is a legal tender including commemorative
coin and Government of India one rupee note
Unquote

Quote:
(b) "commemorative coin" means any coin stamped by the Government or any
other authority empowered by the Government in this behalf to commemorate any
specific occasion or event and expressed in Indian currency;
Unquote

Regards
Sanjay Kansal
Title: Re: Legal Tenders
Post by: Pabitra on October 02, 2018, 04:58:06 PM
Wow, I suppose a coin collector doesn’t really need a basic grasp of economics to be in this hobby. So here’s a link which can be useful for you explaining why countries peg their currencies to the dollar.

Yes, I agree that a coin collector does not need to be knowing economics.

Pegging with Dollar is a desirable thing for every nation but does every nation happen to be in financially viable position to be able to do it successfully over a long period?
In other words, when it is pegged, the dealers of that nation are saved the botheration of quoting exchange rate of multiple currencies against local currency. This also prevents local population, the facility to do arbitration and hence finding more optimal valuation of that currency.

Venezuela is a current example.
Title: Re: Legal Tenders
Post by: Rabi_R on October 02, 2018, 05:06:00 PM


Your interpretation of the Coinage Act is faulty. In fact Coinage Act does not make any distinction between coins issued by RBI and coins sold by mints.

How will Coinage Act make distinction? For making distinction, first it has to be acknowledged that mints sell coins. If that is acknowledged, then what mints sell will come under the purview of the Act. Coinage Act  states coins can be minted at the mints, and that's all the Act states, nothing more.


I don't wan't to continue this discussion any further. If you seriously believe proof coins are legal tenders, you should not have any problem  giving me those and taking from me their face values in currency notes.
Title: Re: Legal Tenders
Post by: kansal888 on October 02, 2018, 05:15:57 PM
How will Coinage Act make distinction? For making distinction, first it has to be acknowledged that mints sell coins. If that is acknowledged, then what mints sell will come under the purview of the Act. Coinage Act  states coins can be minted at the mints, and that's all the Act states, nothing more.

Dear friend

Your interpretation is again wrong.

The Central Government has authority to 'make' coins. It can exercise this authority through existing mints of SPMCIL or a mint of foreign country or a maybe a private mint in future.

Similarly, the Central Government has authority to issue coins. It can very well exercise its authority through RBI or through mints or maybe some other organization in future.

Please show me the section of Coinage Act which says coins can be issued only through RBI

Regards
Sanjay Kansal
Title: Re: Legal Tenders
Post by: Rabi_R on October 02, 2018, 05:22:53 PM
No where it is written RBI will be the only issuing authority, that however, does not make proof coins LT.

Anyway, when are you giving me your proof coins?
Title: Re: Legal Tenders
Post by: andyg on October 02, 2018, 07:56:18 PM
No where it is written RBI will be the only issuing authority, that however, does not make proof coins LT.

Why would proof coins not be legal tender?
Title: Re: Legal Tenders
Post by: Rabi_R on October 02, 2018, 08:00:45 PM
Why would proof coins not be legal tender?

Because, you cannot sell legal tenders.
Title: Re: Legal Tenders
Post by: kansal888 on October 02, 2018, 08:06:07 PM
... Section 6 states "Coins issued under the authority of Section 4 shall be a legal tender"..

....So it is clear that the selling of proof coins by mints does not come under the purview of the Coinage Act. Now any activity by any individual, institution or authority that is not covered by the Coinage Act has nothing to do with legal tenders. Therefore, coins issued by RBI are legal tenders and coins sold by mints are not, although both have been minted as per provisions of Coinage Act.

No where it is written RBI will be the only issuing authority,...

Dear Friend

You had earlier posted that coins 'issued' by RBI are legal tenders and those 'sold' by mints are not. Then after some time, you accepted that no where it is written that RBI is not the only issuing authority. Are not you contradicting yourself?

Taking your logic of word 'issued' forward,  I will post irrefutable proof that high denomination coins are  legal tenders. If you have ever  read any Gazette Notification of Indian coins, you might have noticed this language: "The coins of the following denominations shall also be coined at the Mints for issue under the authority of the Central Government"

I am posting extract of one such Gazette Notification for Rs 10 and Rs 500 coins on 3rd India Africa Forum Summit. It says that coins of Rs 10 and Rs 500 will be 'issued under authority of the Central Government. You will notice that both the denominations - Rs 10 as well as Rs 500 are treated in a similar manner. There is no difference whatsoever that Rs 10 will be issued and Rs 500 will be sold. Your conclusion that one of the denomination is legal tender and other is not is wrong.

This means Central Government has  exercised its authority to issue the coins of both denominations - Rs 10 as well as Rs 500.

Regards

Sanjay Kansal


Title: Re: Legal Tenders
Post by: Rabi_R on October 02, 2018, 08:24:53 PM
Other than 1 rupee notes, all other currencies are issued in India by the RBI, the word issue being in the sense used in the Coinage Act. No where in Gazette Notifications, it is mentioned that the word "issue" has been used in the same sense as it is in Coinage Act.
I haven't written "RBI is not the only issuing authority". I have written "No where it is written RBI will be the only issuing authority" Two are different.

I am loosing patience, if you make me type any more, i will take away all your proof coins.
Title: Re: Legal Tenders
Post by: Figleaf on October 02, 2018, 11:38:05 PM
Patience is a vital commodity for collectors. Get lots of it :)

Some general comments.

Currency peg is a term of the financial trade. It means that the central bank will do the needful to keep the rate against some other currency the same all the time. It's a stupid and disastrous policy if your inflation rate is diverging far or for long from the currency you are pegged to. A managed float is smarter, but can still get you in deep and expensive trouble e.g. if George Soros starts speculating against the float.

Legal tender is a recent (around 1816) invention and a pretty useless legal term that takes away rights. You cannot refuse payment with it. You cannot pay with more than so many pieces. You may not deface or melt, etc. Those rights apply mainly to payments. Proofs are not for payments, since they are sold at an agio only, so their legal tender status is irrelevant. You have rights of ownership instead.

Note that in practice, only stuff people trust is used for payments, irrespective of whether it is legal tender or not or whether it was issued by a government or not. In Zimbabwe, the Zim dollar cannot circulate, because it is not trusted. I paid with USD in Moscow, though the law there says I can't. In India, candy may serve as small change. Same thing in Italy around 1980. In Britain around 1795, copper money was fakes, tokens and other lightweight fluff mingled with a few remaining genuine coins, worn to the bone. I changed money on a black market in several countries at a much better than official rate, because people wanted an international currency, not their own bovine excrement etc. It has been like that all through history (ever heard of a Mughal coin that was legal tender?) and no law will change it.

Peter
Title: Re: Legal Tenders
Post by: repindia on October 03, 2018, 03:02:52 AM
I read through the coinage act again and see that all sections need to be considered in totality to interpret the act and we cannot just pick the language of one particular section.

Section 1 - no explanation necessary
Section 2- defines what coin, commemorative coin, mint etc are. Here explicitly mentioned coin is anything stamped by the government or authorized by the government. Mint is where metal is stamped to make coin
Section 3- Power to establish and abolish Mints -- no explanation necessary

Now coming to the interesting parts--
Section 4 - Coins (already defined in earlier section) to be minted at mints or authorized places (defined in earlier sections). Please note it does not differentiate between proof/unc and coins meant for circulation
Section 5 - Standard weight and remedy -- no explanation necessary
Section 6 - Coin when a legal tender -- just tells you which coins are legal tenders and how. You can use 10 paise coins and they will be accepted as legal tender till 1 Rupee and not beyond that, 1/2 Rupee not exceeding 10 Rupees in payment and any other coins Re1-Rs 1000 unto a 1000 Rupees. Please note no mention of proof or otherwise.
Section 7 - Decimal system of coinage
Section 8 - Power to call in coin, make it non-legal tender.

Now NCLT is not a married bachelor but legal tender coins which are not circulating. Why would someone pay INR 3500, take out the Rs 100 and Rs 10 coins and spend them? That would be stupid and you can do so if you want to. It would be perfectly legal to do so. I remember going to a bank where someone deposited a Rs 10 coin (NCLT) and they accepted it after deliberations.

Also please note that whatever coins produced as proof and UNC sets, their total is still counted as coined and ledger entry made. If you produce 100,000,000 quantity of Re 1 coins and then 3000 proof and 3000 UNC ones, then mint records will show 100,006,000 Re 1 coins being minted.

There is no motivation for the average person to use these coins in commerce since the value the buyer paid for these far exceeds the face value. This is the reason they are called NCLT.

There is an interesting story not from India but some island (I think it might be some British crown dependency but not sure) which used to produce a lot of NCLT coins for collectors. What happened was after a period of time the face value was greater than what they could be purchased for. Well, some smart folks figured this out and started cashing on it. The government very soon stopped this practice and made the coins non-legal tender.

I hope @Figleaf or @andyg might remember this since it was closer to Europe (or was it one of these Pacific Islands??).

@kansal888 is right on this one.
Title: Re: Legal Tenders
Post by: repindia on October 03, 2018, 03:34:33 AM
I was just searching for the NCLT story on Google when I came across this story in Britain where a man bought £29,000 worth of £100 face coins from the mint by credit card and accumulated the points enough for a good first class holiday. He planned to deposit these in the bank and was refused. The Royal Mint instructed the bank not to deposit the coins. I did some more research and found that £1, £2 and £5 coins only can be redeemed for unlimited amount. His £100 did not fall under this.

I also remember watching a video in which a person in the US tried to sell a Canada Maple coin which has C$50 face and 1 oz of gold in it to the general public. No one was willing to buy that coin for $25! Ignorant people.  :) :) :)

Title: Re: Legal Tenders
Post by: Rabi_R on October 03, 2018, 04:31:15 AM


Section 4 - Coins (already defined in earlier section) to be minted at mints or authorized places (defined in earlier sections). Please note it does not differentiate between proof/unc and coins meant for circulation


This Act is meant for only circulation coins. Why will it even attempt to mention proofs/UNCs?

Title: Re: Legal Tenders
Post by: Rabi_R on October 03, 2018, 04:35:45 AM



 If you produce 100,000,000 quantity of Re 1 coins and then 3000 proof and 3000 UNC ones, then mint records will show 100,006,000 Re 1 coins being minted.


I think i have written this earlier..........."coins   issued by RBI are legal tenders and coins sold by mints are not, although both have been minted as per provision of Coinage Act "
Title: Re: Legal Tenders
Post by: dheer on October 03, 2018, 04:36:37 AM
Thanks repindia. Spot on analysis. There is an interesting case of Japan gold coins on other thread.
Title: Re: Legal Tenders
Post by: Rabi_R on October 03, 2018, 04:44:51 AM




Now NCLT is not a married bachelor but legal tender coins which are not circulating.

Section 12 of the Coinage Act may be referred -
1) No person shall
iv) (c)........for the purpose of selling such coins for value other than their face value........

If proof coins are legal tenders, then coin dealers may please be questioned how they are selling 100rs coins for 5000 rs.
And how mints themselves are selling it, let us keep that discussion for another day.
Title: Re: Legal Tenders
Post by: repindia on October 03, 2018, 05:52:48 AM
Section 12 of the Coinage Act may be referred -
1) No person shall
iv) (c)........for the purpose of selling such coins for value other than their face value........

If proof coins are legal tenders, then coin dealers may please be questioned how they are selling 100rs coins for 5000 rs.
And how mints themselves are selling it, let us keep that discussion for another day.

This question is answered in the coinage act itself! Please read Section 12 in full, particularly this-->

Quote
(3) Nothing in this section shall apply--
(ii) to the Mint, Reserve Bank of India and its authorised agents, and suppliers of coins or coin blanks to the extent of orders placed by or under the authority of the Government until their supply or completion of orders placed by the Government;

See now your doubts are cleared. The mint and RBI are exempt from all points of section 12. If that was not the case then the mints could not hold the planchets nor could they mint coins! It's as simple as that. The mints use this exclusion to price the coins sky high beyond our reach.

I hope this solves the little issue which you had. It is clear as daylight (at least to me). If you still disagree then we should agree to disagree.


Title: Re: Legal Tenders
Post by: repindia on October 03, 2018, 05:57:42 AM
I had never entirely read the coinage act of India till now and this brings an interesting point about dealers selling the latest coins for a premium. It seems this is illegal and they are hoarding coins meant to be supplied to the general public. The government issues circulating coins for day to day commerce and not for someone to hoard these bright shiny coins to sell to collectors for x50-100 the face value. The coinage act says nothing about coins pulled from circulation (prior year coins) but I think there is an understanding that this is okay and you won't be prosecuted. The legal professionals might be able to throw more light on this.
Title: Re: Legal Tenders
Post by: Navaneeth on October 03, 2018, 07:12:23 AM
This question is answered in the coinage act itself! Please read Section 12 in full, particularly this-->

See now your doubts are cleared. The mint and RBI are exempt from all points of section 12. If that was not the case then the mints could not hold the planchets nor could they mint coins! It's as simple as that. The mints use this exclusion to price the coins sky high beyond our reach.

I hope this solves the little issue which you had. It is clear as daylight (at least to me). If you still disagree then we should agree to disagree.

Thanks for this information.
Title: Re: Legal Tenders
Post by: kansal888 on October 03, 2018, 08:50:32 AM
Other than 1 rupee notes, all other currencies are issued in India by the RBI, the word issue being in the sense used in the Coinage Act. No where in Gazette Notifications, it is mentioned that the word "issue" has been used in the same sense as it is in Coinage Act.

Dear Rabi_R

It is a matter of accepted principles that if a Gazette Notification is issued under any Act (Say Coinage Act or otherwise), the terminology used in the Gazette Notification will have the same meaning as given in its parent document -i.e. the relevant Act.

Gazette Notifications of the new coins are using language of form -  The coins of the following denominations  shall also be coined at the Mint for issue under the authority of the Central Government.... namely:

(i) Five Hundred Rupees;
(ii) Ten Rupees. 

The words like coin, issue, mints etc used in the Gazette will have their meanings derived from the Coinage Act, unless we can prove that the meaning was explicitly contrary to the context.

You do not have liberty of assigning arbitrary meanings to them.

Coinage Act clearly says:"coin" means any coin which is made of any metal or any other material stamped by the Government or any other authority empowered by the Government in this behalf and which is a legal tender including commemorative coin and Government of India one rupee note.

For me, Rs 500 coin as well as Rs 10 coin issued under this Gazette will be legal tenders. If you don't want to accept that Non Circulating Tenders (NCLTs) are legal tenders, then its upto you.

Regards

Sanjay Kansal
 

Title: Re: Legal Tenders
Post by: EWC on October 03, 2018, 09:40:48 AM
I cannot comment on the situation in India.  But I do feel that people are perhaps seeking to stand upon firm ground here, where in the modern financial world, there is hardly any to be found.

Some years ago, as I understand it,  UK clearing banks found themselves over stocked with 50p pieces, and requested to return them to B of E.  Who refused to accept them.

Clearing banks then loaded them into lorries and drove them to a B of E facility, in order to cover a routine transaction, but the gates were closed against them

Are UK 50p pieces legal tender?

I also visited B of E to ask the question:  why did Scotland and N. Ireland have £100 notes, when England did not?

The man I met would not answer the question directly, although he was helpful with indirect clues.  To my surprise though, it came out that Parliament had no say in the matter.  The Chancellor of the Exchequer merely had to instruct official bodies to issue and receive them.  It appeared to me that the whole matter could (legally) be brought into being on the basis of merely two letters issued by one individual……

Rob T

Title: Re: Legal Tenders
Post by: kansal888 on October 04, 2018, 06:50:19 AM
Section 12 of the Coinage Act may be referred -
1) No person shall
iv) (c)........for the purpose of selling such coins for value other than their face value........
...
And how mints themselves are selling it, let us keep that discussion for another day.

Dear Rabi_R

It seems you have not read the provisions of Section 12 of Coinage Act in totality. Your premise that proof coins are not legal tenders because they are sold at higher than face value is wrong.

While Section 12(1) says that "no person shall... have in his possession, custody or control... coins substantially in excess of his reasonable requirements for the purpose of selling such coins for value other than their face value or for melting or for destroying or for disposing these coins other than as a medium of exchange"

A clear exemption is given to Mints and RBI in Section 12 (3). It clearly mentions that:

Nothing in this section shall apply.. to the Mint, Reserve Bank of India and its authorized agents, and suppliers of coins..

Thus the restriction of Section 12 does not apply on RBI and Mints. So Mints can very well sell proof coins at a price higher than their face value.

This was pointed out by repindia also

Regards
Sanjay Kansal


Title: Re: Legal Tenders
Post by: andyg on October 05, 2018, 12:32:27 AM

I hope @Figleaf or @andyg might remember this since it was closer to Europe (or was it one of these Pacific Islands??).


Marshall Islands I think
http://www.pireport.org/articles/1997/10/20/marshall-isalnds-legal-tender-coins-bring-lawsuit (http://www.pireport.org/articles/1997/10/20/marshall-isalnds-legal-tender-coins-bring-lawsuit)
From memory (I've not found a quote) I think the outcome was that the coins could be redeemed at 30% of face.
Title: Re: Legal Tenders
Post by: repindia on October 05, 2018, 06:25:10 AM
Marshall Islands I think
http://www.pireport.org/articles/1997/10/20/marshall-isalnds-legal-tender-coins-bring-lawsuit (http://www.pireport.org/articles/1997/10/20/marshall-isalnds-legal-tender-coins-bring-lawsuit)
From memory (I've not found a quote) I think the outcome was that the coins could be redeemed at 30% of face.

That's it! I was way off geographically.  :)
Title: Re: Legal Tenders
Post by: kansal888 on October 05, 2018, 08:18:42 AM
Dear Friends

I am posting the link of Wikipedia on NCLT.

https://en.wikipedia.org/wiki/Non-circulating_legal_tender (https://en.wikipedia.org/wiki/Non-circulating_legal_tender)

Signing off for now on this thread.

Regards

Sanjay Kansal

Non-circulating legal tender (NCLT) refers to coins that are theoretically legal tender and could circulate but do not because their issue price, and/or their melt value at the time of issue is significantly above the arbitrary legal tender value placed thereon. They are sold to collectors and investors with no intention that they be used as money. Notable examples would include commemoratives, proofs, bullion coins, presentation sets, patterns and the like.[1]

Some coins intended as NCLT have historically circulated such as the 1893 World's Columbian Exposition Half Dollars[2] which was a commemorative and the 1856 Flying Eagle cent[3] which was a pattern.

Private issues are not NCLT because they are not legal tender and are properly viewed as medals
Title: Re: Legal Tenders
Post by: EWC on October 05, 2018, 08:42:24 AM
But I do feel that people are perhaps seeking to stand upon firm ground here, where in the modern financial world, there is hardly any to be found.

I am posting the link of Wikipedia on NCLT.
https://en.wikipedia.org/wiki/Non-circulating_legal_tender (https://en.wikipedia.org/wiki/Non-circulating_legal_tender)
Signing off for now on this thread.

Given its mode of production - the apparent suggestion - that Wikipedia should be the last word  – seems to me to be clutching at straws

Rob T
Title: Re: Legal Tenders
Post by: kansal888 on October 05, 2018, 12:12:21 PM
Given its mode of production - the apparent suggestion - that Wikipedia should be the last word  – seems to me to be clutching at straws

Rob T

I agree with you.
Title: Re: Legal Tenders
Post by: Abhay on March 30, 2019, 04:48:21 AM
If you see the GST Invoice issued by the Kolkata Mint, the HSN Code for the coins is mentioned as 71181000.

If you search for HSN Code 71181000, it shows as "HS Codes 71181000 : HS Classifcations of Coin (other than gold coin), not being legal tender. Harmonized System Codes of Chapter 71 : Natural or cultured pearls, precious or semi-precious stones, preciousmetals, metals clad with precious metal and articles thereof; immitation jewellery; coin."

So, as per Kolkata Mint, all the Proof and UNC sets are being sold as Non Legal Tender Coins.

Abhay
Title: Re: Legal Tenders
Post by: dheer on March 30, 2019, 08:17:08 AM
Interesting
Title: Re: Legal Tenders
Post by: Rabi_R on March 30, 2019, 09:45:53 AM
What is interesting?
Title: Re: Legal Tenders
Post by: kansal888 on March 31, 2019, 03:05:30 AM

If you search for HSN Code 71181000, it shows as "HS Codes 71181000 : HS Classifcations of Coin (other than gold coin), not being legal tender.


Dear Abhay ji

An error in correct HSN classification by the accounts department of Kolkata mint does not means commemorative coins sold by Kolkata mint are not legal tender. May be the GST system does not have correct HSN codes for commemorative

Regards
Sanjay Kansal