What is Legal Tender and Non Legal Tender Money ?

                                                 There is  also two types  of  money which is  commonly in use by people but  we  do  not  know the  real  cause  of  difference. And  this difference  is on  the  base  of  legality provided  by the Govt.  Keynes  also   classified  money  on  the  basis  of  its  legality  into legal-tender  and  non -legal tender money.

                                                         Legal  tender  Money – is  that   which  the  state and  the people accept as  the  means  of  payment  and  in  discharge  of  debts.  Since  it  has  the  authority   of  the  Govt. , such money  is accepted compulsorily  by  the  people. All notes and coins issued  by  the  Govt.   and  the central  bank of a country are  compulsory Legal- Tender  in  that  country. 

                                                                  Legal  -Tender money is further divided into limited and unlimited legal money .  All coins  of  the  denominations of  1 paisa  to  25 paisa  are  limited Legal -tender  in India . Payments  in  them  can  be  made up  to  a limit  of  Rs. 25 . On the  other  hand , all  paper  notes  and coins  of  50 paise  and 1  Rupee   are unlimited   Legal Tender  in India.  People  have  to  accept  payments  in  unlimited  quantities in  these  notes  and  coins.   

                                                                                    Non -Legal  Tender money – which  does  not  possess any  legal    authority  of  the  state or  the  central  bank   . Bank  money  in  the  form  of  cheques and  bills of  exchange , promissory  notes etc is  non – legal tender  money .  People  are  not  bound  to  accept  such  money because  there  is  no legal sanction behind   their  issue.————————————————————————————————————————————————————————————————The End.—————————————————————-

 

 

 

 

 

 

 

 

 

 

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