Meaning of Legal Tender

What is legal Tender?

It is a form of money which cannot be refused by any citizen for settlement of any kind of transaction

Example-

If I have to pay a shopkeeper Rs 500, I can give him any currency note or coin as payment

The person cannot refuse to take any type of currency note

Hence, coins and currency notes are legal tenders

Exception

However, that person can refuse to take cheque of 500 or Fixed deposit of 500, as these are not legal tenders

Which type of Money are Legal Tenders and Which are not legal Tenders

Concept of Limited Legal Tenders

NCERT Questions

No questions in this part

Other Books

Question 1

In the following questions, select the correct answers:

1 ____ are termed as Legal Tender Money.

1. Demand Deposits
2. Time Deposits
3. Inter-bank Deposits
4. Currency notes

Question 2

Currency means:

1. Currency Notes
2. Coins
3. Both A and B
4. None of these

Question 3

In India, paper notes are:

1. Limited Legal Tender
2. Unlimited Legal Tender
3. Both A and B
4. None of these

Oswaal Questions

Question 2

Which of the following statements is false?

1. Demand deposits are not legal tender.
2. Currency notes issued are not legal tender.
3. Term deposits are not legal tender.
4. Wheat is not legal tender.

Question 3

Which of the following statements is true?

1. All financial institutions are banking institutions.
2. RBI has the complete authority to issue currency notes.
3. The government of India issues currency notes.
4. Banking institutions issue currency notes.