The FAQs have been prepared by Medha Priya, a fourth year BA LLB student at Amity Law School, Noida. She is currently interning with LatestLaws.com.
The Coinage Act was enacted on 1st September 2011 and it extends to the whole of India.
1. What is the purpose of this Act?
The Coinage Act, 2011 was enacted to consolidate the laws in relation to coinage and the mints and its protection. The Act puts a strict bar on activities like melting, destruction, making or possession of the coins thereof for issue and for matters connected therewith or incidental thereto.
2. With the enactment of the Coinage Act, 2011, which other Acts were repealed?
The Coinage Act explicitly states under Section 27, that it has repealed the following existing enactments-
- The Metal Tokens Act, 1889
- The Coinage Act, 1906
- The Bronze Coin (Legal Tender) Act, 1918
- The Currency Ordinance, 1940
- The Small Coins (Offenses) Act, 1971
The Coinage Act, 2011 is an amalgamation of all the above-mentioned enactments.
3. Who has the power to establish and abolish mint?
Under the Act, the Government has the authority to —
- Establish a Mint at any place which may be managed by it or by any other person, upon whom the purpose is devolved
- Abolish any Mint.
4. Can the Government of India take the assistance of any foreign country in making of coins?
Yes, the Central Government can take the help of any organization within the country or the government of any foreign country to make coins, whensoever it is of the opinion that it is indispensable for the public interest so to do. Even coins can be made abroad and imported into India.
5. In which year did the currency function get transferred to RBI?
Section 22 of the RBI Act, 1934 provided that RBI has the sole right to issue Bank notes of all denominations. On 1st April 1935, the currency function moved from Controller of Currency to RBI.
6. What is the role of RBI according to Coinage Act, 2011?
RBI functions as an agent of the Government in the distribution of Coins. It is responsible for making decisions on the pattern, production and the all-inclusive management of the nation’s currency, with the aim of ensuring an adequate supply of clean and genuine notes. The Reserve Bank from time-to-time addresses security issues and find ways to enhance security features to alleviate the risk of counterfeiting or forgery of currency notes after consulting with the government.
7. Can RBI play a role in minting of the coins?
No, Government of India has the sole right to mint coins and therefore, RBI cannot interfere with this right.
8. When are coins considered as a valid currency according to the Coinage Act, 2011?
Under Section 6 of the Coinage Act, 2011, coins are considered to be the valid currency for payment on the condition that the coins are not defaced and defiled and their weight is not less than the prescribed weight.
9. When are coins considered to be a Legal Tender?
Under Section 4 of the Coinage Act, 2011, the coins issued shall be a legal tender in payment, in the following cases:
- A coin of with a face value which should not be less than a rupee, for any sum not exceeding one thousand rupees;
- A half-rupee coin, for a sum of less than ten rupees;
- Coins with other denominations, for any sum not exceeding one rupee.
10. How is the standard weight of the coin decided?
The standard weight of the coin is decided as in accordance with the provisions laid down under the Section 4 of Coinage Act, 2011. In any case, the metallic value of coin should not be more than the face value of coins. Because if this this allowed, then people will start earning more profit by melting the coin and selling its metal in the market. Therefore, this thing has been introduced to prevent the black marketers and goldsmiths from minting the coins.
11. What is meant by decimalization of coins?
In the post-independence period, the basic unit of Indian currency was 1 Rupee which could be divided into16 Annas or 64 pice or paisa (as per recent usage). The lowest denomination of Indian Rupee was half pice, which now has been discarded. The Government of that time minted One Rupee, Half Rupee, Quarter Rupee, Two Annas, One Anna, Half Anna and One Pice coins.
Then, the decimalization of the coinage was here on in 1957 and the 16 Anna and 64 Pice were rendered obsolete. And from hereon, the term pice changed to paisa and 1 Rupee was divided into 100 Paise. This is called Decimalization of Coinage.
12. What is specifically prohibited under the Coinage Act, 2011?
The following activities whether covert or overt are prohibited under the Act:
- Use of any metal piece whether metal printed or non-printed as a coin.
- Melting or mutilating a coin.
- Using any other coin except through the medium of exchange.
- Possessing the coin in molten or solid-state.
- Keeping the coin in the mutilated or fragmented form.
- Keeping more coins than what is required.
- Selling coins for more than their face value.
- Using the coins purposely to melt and make any other object. However, the news has often been seen circulated about the Indian coins being smuggled into Bangladesh and blades and other fake jewelry are made out from them.
- Bringing any piece of metal to be used as coin into India by sea or by land or by air without the permission of the Government.
13. What is the penalty for the prohibited acts mentioned above?
According to Section 12, whosoever acts in contrary to any provision contained therein, shall be punished with imprisonment which may extend to seven years with fine.
14. What rights are provided to person authorized by the government who receives a counterfeited coin?
According to Section 9 of the Coinage Act 2011, if any person authorized by the Government has valid reasons to believe that he has been given a counterfeit coin by a person, then that person has the right to destroy that coin and damage it. The coin will belong to the holder.
15. What if a person refuses to accept any legal coin?
If any person refuses to take any coin that is in circulation, then an FIR can be lodged against him and after which, an action will be taken against him under the Indian Currency Act and IPC. The complaint revolving around such cases can also be made to the Reserve Bank of India.
16. What is the prescribed punishment for the person who cuts or defiles a coin under the Act?
Under the provisions of clause (a) of section 5 of the Coinage Act, 2011, if a person cuts or breaks a coin, he will have to pay a fine of the same value of the same coin.
17. What are the measures being introduced to improve the supply of coins?
- The various Mints in the country have been renovated and upgraded to escalate their production capacities.
- Government has in a recent accord undertaken to import coins to augment the indigenous production.
- Notes in denomination of Rs.5 have been reinstated which can be an adjunct to the supply of coins.
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