The coins issued by the Government of India under Section 6 of The Coinage Act, 2011, shall be legal tender in payment or on account provided that a coin has not been defaced and has not lost weight so as to be less than such weight as may be prescribed in its case.
However, a coin of any denomination that is not lower than one rupee shall be legal tender for any sum not exceeding one thousand rupees. The fifty paise (half rupee) coin shall be legal tender for any sum not exceeding ten rupees. Therefore these coins are known as limited legal tender.
Although, anyone cannot be forced to accept coins beyond the limits mentioned above, voluntarily accepting coins for amounts exceeding the limits mentioned above is not prohibited.
However, RBI directed all the banks/branches to accept coins of all denominations tendered at their counters either for exchange or for deposit in accounts in terms of Master Circular DCM (NE) No. G – 1/08.07.18/2017-18 dated July 03, 2017, on Facility for Exchange of Notes and Coins where it was advised that none of the bank branches should refuse to accept small denomination notes and/or coins tendered at their counters.
RBI vide circular dated February 15, 2018, further advised all the banks that it will be preferable to accept coins, particularly, in the denominations of ₹ 1 and 2, by weighment. However, accepting coins packed in polythene sachets of 100 each would perhaps be more convenient for the cashiers as well as the customers. Such polythene sachets may be kept at the counters and made available to the customers.
In respect of coins, the role of RBI is limited to the distribution of coins that are supplied by the Government of India. The Government of India is responsible for the designing and minting of coins in various denominations as per the Coinage Act, of 2011.
