Skip to main content

Legal Tender

Noble initiative to start writing more blogs educational in nature related to new things I come across as I move ahead in my MBA journey. About an year and a half left in this quest for knowledge. Will share in detail a new post about my college experiences in another post.

Coming to business, we had this interesting session by our Macro Economics professor on how the money system works. What gives money its value and so on. One of the new terms I come across and interestingly the meaning is something quite contrary to what I had expected. So just thought I should research a bit more and write about it.

Quoting from Investopedia:

"Legal tender is any official medium of payment recognised by law that can be used to extinguish a public or private debt, or meet a financial obligation. The national currency is legal tender in practically every country. A creditor is obligated to accept legal tender toward repayment of a debt."

So to basically put it, Legal tender ensures that you if you pay through a medium that is accepted by the law in a country, a creditor cannot deny acceptance. There are certain limits on it though.

In India this is what is mentioned on the RBI website regarding legal tender. It is not like you need to payment of ₹ 5,000 and you end up taking a sack of 10,000 50p coins and ask the shopkeeper to count. Imagine the tedious nature of the task, thus it is essential to put certain checks and balances in place. This is what is mentioned regarding the value of money that can be used in the Reserve Bank of India (RBI) website:

“The coins issued under the authority of Section 6 of The Coinage Act, 2011, shall be legal tender in payment or on account i.e. 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: - (a) coin of any denomination not lower than one rupee shall be legal tender for any sum, (b) half rupee coin shall be legal tender for any sum not exceeding ten rupees,
Every banknote issued by Reserve Bank of India ( ₹ 2, ₹ 5, ₹ 10, ₹ 20, ₹ 50, ₹ 100, ₹ 500 and ₹ 1000) shall be legal tender at any place in India in payment or on account for the amount expressed therein, and shall be guaranteed by the Central Government, subject to provisions of sub-section (2) Section 26 of RBI Act, 1934”

Invitation to tender (ITT) is an entirely different term. As per businessdictionary.com :

“Initiating step of a competitive tendering process in which qualified suppliers or contractors are invited to submit sealed bids for construction or for supply of specific and clearly defined goods or services during a specified timeframe. Also called request for tenders.”

                                                   Image Courtesy: News18.com

I hope this post was informative in understanding the difference between ITT and Legal Tender.


Comments

Post a Comment

Popular posts from this blog

Random thoughts !!

Maybe because of the fact that all my days are truly boring and non eventful, maybe not, i dont know( i am good at coming up with excuses) that i refrain from posting in daily. Life as usual is truly hectic and not easy to describe the complex functionalities of the daily life, which can't be given a vivid description, but i assure you, survival is most difficult and what all things we do to just move is absolutely amzing and stunning, right from pleasing our teachers and doing assignments to the ever perilous task of explaining why your late for class, and coming up with new innovative excuses every morning does constitute a major chunk of our college life. And unlike the old days, when people used to say that college life is the best part ( still hear it a lot), i find it a struggle to merely move on, i mean the only real time we have is used up for finishing off daily chores and mugging for the next day, and you wouldn't believe it, there are teachers who actually punish yo...
Post a Comment
Read more

The blog post!

To start with, I think I should justify the heading, the title post, well, this is again one of those blog posts I'm putting in after a very very long time in which a lot of wonderful and not so wonderful things have happened in my life. Well thats why its called "The blog post!" One of the books I have been recently reading is Sidin Vadukut's Who let the dork out?. About the book and all, its quite funny and interesting and it was more interesting for me as was written by a malayali. Some words randomly thrown here and there did make some sense to me! The sad part is that well, in between I got lazy and still have around 50 pages towards the climax. This trait of my character that I identified is that I do not like to dive deep into anything. I might find something interesting and trust me, I dont even start with anything if I dont find it very interesting.I get the plot then I leave. Its too difficult to keep my interest pinned onto something. But these days ...
Post a Comment
Read more

Practicals...!!

As usual, this is a post after a rather long time, owning to the fact that i do not get time to sit, think and type at the same time due to lack of time. Just had my S3 survey practical yesterday and with that done, S3 is all wrapped up(hopefully) though in order to confirm it we have to anxiously await the results which will be arriving shortly. Yes, and yesterday morning, well i was tensed, come to analyse, its pretty interesting. The first time I had to do practicals was back at school, in my 9th standard i believe, where we used to have chemistry and physics practicals, I must admit I was never all that impressed by those, maybe because of the sole reason that all the things we did were pretty inefficient. Anyway I dint have a practical exam back then, so we used to consider lab hours as free hours, nd have a gala time. But slowly as we entered the 11th standard, we realised the reality, that we had to give an exam at the end of 12th. I was least bothered initially, but slowly rea...
Post a Comment
Read more