Author Topic: Collecting circulation coins  (Read 176 times)

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Offline Rabi_R

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Collecting circulation coins
« on: September 02, 2018, 12:15:24 PM »
I am putting this question in forum because Google did not fetch me any answer. My question is India specific as law varies from country to country.

How many pieces of a circulation coin am i allowed to keep ? My idea is, collecting circulation coins is as good as hoarding, so there must be a limit. What's that number?

Offline Bimat

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Collecting circulation coins
« Reply #1 on: September 02, 2018, 12:33:40 PM »
No limit as far as I know. Even when used for transaction purpose, I don't think India has any law which limits a particular amount which can be paid using only coins.

Aditya
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Offline Rabi_R

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Re: Collecting circulation coins
« Reply #2 on: September 02, 2018, 01:01:49 PM »
For transaction purposes, there is a rule. The coinage act of 2011 provides -

(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;
(b) a half-rupee coin, for any sum not exceeding ten rupees;
(c) any other coin, for any sum not exceeding one rupee:

That very Act also states -
(1) No person shall--(iv) have in his possession, custody or control,--
(c) 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.
Explanation.--For the purposes of determining the reasonable
requirements of coins of a person, due regard shall be had to--
(i) his total daily requirements of coins;
(ii) the nature of his business, occupation or profession

The Act didn't provide a numerical limit.



Offline Figleaf

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Re: Collecting circulation coins
« Reply #3 on: September 02, 2018, 02:03:47 PM »
The first part of the text you quote refers only to how many coins you can use in a single transaction. For instance, if you get a traffic fine, you can only pay the first 1000 rupees with coins. However, the police may not refuse a cash payment including 1000 coins of 1 rupee.

The second part is vague, since reasonable cannot be specified, since it varies. A small shopkeeper will need more than a teenage student. In practice, I would speculate that this article is used only where the number of coins retained obviously constitute a public nuisance. I would expect a judge would demand proof that the number of coins kept is very clearly excessive.

A private person who has say 5 million coins in his home may be hit with this law. A coin collector checking rolls or bags who has e.g. 2000 coins in his collection and 1000 coins to check and recycle should not be covered, even though some people might say that it is excessive. A lawyer would argue that the rolls or bags constitute the needs of this type of collector, retaining them for checking is not a nuisance and the collection is a need by itself. It would be hard to argue with that.

Peter
An unidentified coin is a piece of metal. An identified coin is a piece of history.

Offline Rabi_R

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Re: Collecting circulation coins
« Reply #4 on: September 02, 2018, 02:42:53 PM »
Actually, law in India is enacted in two stages. In the upper stage, only broad outline regarding any issue is provided which is called Act. Acts does not provide instructions regarding application or enforcement of the law. This is where rules come in. Rules are made on the basis of Acts. There may be innumerable rules, each for a specific situation, made from a single Act.
What i have quoted above is the Act ( Coinage Act 2011). I searched Google for the rules, but didn't find any. That's the reason for the post.

Regards.

Offline Figleaf

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Re: Collecting circulation coins
« Reply #5 on: September 02, 2018, 09:58:29 PM »
The act and rules situation applies in other countries also. As I tried to explain, the act needs no rules, because there is no formula that would apply to all people in all situations, so it's up to a judge to decide if there is ever a case under the law.

In my opinion, the act is unnecessary and may be un-enforceable to begin with. It refers to a situation where you would have full value (standard) silver coins and fiduciary (token) coins. The Bank of England created such a coinage in the UK in 1816 and others, like the members of the Latin Monetary Union followed suit. In theory, you could always collect your token coins, offer them to the Central Bank in exchange for standard coins and export or re-melt those. In that way, token coins were as good as standard coins.

The problem is that exchanging token coins for standard coins is a hassle, especially in a big country, if there are only a few addresses where you can make the exchange. Normally, that problem is theoretical, because you spend about as many token coins as you receive. However, because of the legal tender concept, which says you MUST accept legal tender coins, you need an article in the coin law that limits the number of token coins you must accept, or you risk that if trust in the token coins is somehow lost, people may be faced with an avalanche of token coins.

Fast forward to today. Standard coins don't exist any more. Token coins contain no silver and they are usually readily accepted. Most transactions are electronic and involve no coins at all. There are machines that will exchange unlimited amounts of small coins for notes or coupons. Who needs a legal tender concept? Who's worried about not having precious metal in the coins except for extremists of the political right? So who needs a limit on the number of coins in a transaction?

As an example, AFAIK, the euro does not use the legal tender concept and does not have a rule on how many coins of a denomination you can use. It's up to the parties in the transaction to agree on what is acceptable. In some countries 1 and 2 cent coins are not accepted. In some you can't pay with 100, 200 or 500 euro notes. Bus drivers may refuse a 20 and a 50 euro note, while taxi drivers may refuse anything below 50 cent. Foreigners may run into a momentarily awkward situation, but they are not worse than not knowing where to buy a bus ticket or wondering which letter on the toilet door means "women".

Peter
An unidentified coin is a piece of metal. An identified coin is a piece of history.

Offline FosseWay

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Re: Collecting circulation coins
« Reply #6 on: September 03, 2018, 08:04:29 AM »
Who needs a legal tender concept? Who's worried about not having precious metal in the coins except for extremists of the political right? So who needs a limit on the number of coins in a transaction?

As an example, AFAIK, the euro does not use the legal tender concept and does not have a rule on how many coins of a denomination you can use. It's up to the parties in the transaction to agree on what is acceptable. In some countries 1 and 2 cent coins are not accepted. In some you can't pay with 100, 200 or 500 euro notes. Bus drivers may refuse a 20 and a 50 euro note, while taxi drivers may refuse anything below 50 cent. Foreigners may run into a momentarily awkward situation, but they are not worse than not knowing where to buy a bus ticket or wondering which letter on the toilet door means "women".

The "legal tender" concept as formulated by e.g. British law is, I agree, pointless. But I disagree that there is no place for some form of regulation of what is and isn't an acceptable form of payment. I think that rather than abolishing the LT law, we should extend it and modify it to all transactions, not just those where a "debt" is incurred - this distinction is daft. There is a place for reassuring retailers that they don't need to accept tonnes of small change because some joker chooses to mess with them. But more importantly, there is a place for reassuring those who are spending money that the cash they have in their pocket will, not may or ought to be, accepted by retailers. If good operational reasons mean that retailers do not want to accept high-value banknotes, then if this is publicised at the entrance to the premises, before the customer has filled their trolley with goods, that is fine. What is not fine is for a customer to get to the checkout and find that he cannot use a perfectly normal banknote that he has received from a cash machine.

On the 1c/2c coins issue in the eurozone - countries can choose to implement Swedish rounding and not actively use the two smallest denominations, and customers need to follow that. But again it is not IMV acceptable for retailers in e.g. the Netherlands or Ireland to refuse payment of an acceptable sum (multiple of 5c) in 1c or 2c coins. Either these coins can be spent or they can't - there should be no middle ground.

The most egregious abuse of the absence of a proper legal tender law is closer to home (for me) - many retailers in Sweden refuse to accept cash at all. This should simply be illegal.