Skip to content

Refusing legal tender is illegal but nobody seems to care

May 30, 2008

chemist nightNo one has the right to refuse legal tender but they still do it…can you imagine making a fuss if a shop-keeper refuses to accept a 50 paise coin? No one does and the behavior continues. It doesn’t make sense, why shop-keepers (even government bus conductors) are doing it. I can understand the logic of not accepting torn notes, but not to accept coins in perfect condition is ludicrous and these things have the habit of spreading.

As a result of this behavior, the 50 p coin may soon be history. In Delhi shop-keepers are routinely refusing to take it. In Mumbai they take it reluctantly, as if doing you a favour. In fact it seems to be an all-India problem as there are similar reports from Hyderabad. I guess a lot of people are facing this problem. And if you are like me and have a stash of coins somewhere in the house, you are probably wondering how exactly to get rid of those 50 paise coins…

Why 50 paise, I have a small stash of 25 paise coins in my collection alongwith the 50 p’s…the other day I cut small coins 25persuaded my regular shop-keeper to take a few and now I now wonder if he’ll welcome me back!

There is always the option of going to the bank but even banks make a fuss and at times outrightly refuse! Ofcourse one can complain to the bank ombudsman because according to RBI rules banks cannot refuse to take coins or notes of small denominations but then most people don’t complain do they. Not only is it time consuming, it can be embarrassing to argue with a bank teller who has refused to take your coins.

And to think that not so long ago there was an actual shortage of 50 paise coins! Shopkeepers would beg you to give them these coins! That shortage was apparently caused by the illegal melting of coins across the border in Bangladesh to make razor blades out of the stainless steel! This is because the metal was and still is more expensive than the value of the coin…

And it’s not just India, but also the United States and Britain which have this problem…they are warning people not to melt coins as they will get into serious trouble if they do. Unfortunately there are no choices for governments as making coins out of anything else but metal is not possible. Metal is best because it’s hardy, “easy to stamp and design,” and cheaper than materials like ceramic or silicone. But most important – metal coins are difficult to counterfeit.

But I have digressed. What to do with the 25 paise and 50 paise coins is the problem. Huge numbers of 25 paise and 50 paise coins are floating around in the country and no one wants them. I wonder how much money that amounts to actually…but I can’t imagine the government taking the trouble to sort out this issue. The only choice left to us citizens is to sell them to Bangladesh to make razors but if you don’t know any smugglers you have a serious problem. 🙂

If you have 25 paise coins I would advise you to make a will and leave them to your grandchildren! In the case of old 50p coins find some poor bakra and pass them on. The news that 50 paise coins are not being accepted has already leaked onto the net (links above) and now I am adding to this breach – the news will continue to spread and people will to rush to offload their 50 paise…and soon you won’t find a soul50 paisa coins accepting them. Hopefully there will be a reverse run on banks…!

If you want to be good, give them to your bank.

If you want to be saintly, accept 50 paise coins and the 25 paise coins.

(Photos are all taken by me and copyrighted)

(A reader R. S. Jamwal from Delhi wrote to me about shopkeepers not accepting 50 paise coins. He wanted me to raise awareness about this issue in the hope that people who refuse 50 paise coins will realise that they are doing something illegal, but I think I just may have made the problem worse…)

23 Comments leave one →
  1. May 30, 2008 9:29 am

    Huh even 50p coins are being refused by shopkeepers? Sad to know that even 50p coins are losing its value nowadays like 5 paises those days.

    I also remembered about the bus conductors used to tell me that there is no change of 50p during my recent trip to India. If the conductor is genuine and If there is a real shortage for them probably the corporate bus station can make link with petty shopkeepers and get changes from them for their day to day ticketing operations.

    Hope at least these concerns reaches out few shop owners they change accordingly.

  2. May 30, 2008 9:30 am

    Coins of less than one rupee denomination have lost their purchasing power. Even beggars are reluctant to take it. Government should stop minting the coins of 10 paise and 25 paise coins immediately. Banks should take back these coins from public to stop circulation. However 50 paise coins may continue for some more time. In Tamilnadu there is no problem in using these coins.

  3. May 30, 2008 9:49 am

    oh well in chennai,the auto drivers and the veggie vendors now don’t seem to have anything lesser than 10 or 5 bucks…so no problems…we solve the problem by rounding the things…

  4. May 30, 2008 10:14 am

    Very interesting and unique post, Nita!

    I used to collect coins and I had a few old coins with me, including a few pre-indepencence era coins using the stupid non-decimal system issued by the British raj. I guess 25p and 50p coins are going to be seen as valuable collector’s items in maybe two decades from now! 😉 😀

    I agree with Old Sailor and Vishesh. Though we don’t have a problem as of now, the notorious autorickshaw drivers 😡 always count in fives and tens 😦

  5. May 30, 2008 10:20 am

    once a shopkeeper did not accept the paisa’s I given him. I told him its illegal not to accept it.
    he laughed the hell out spitting all over the shop and exclaimed to his employees ” ILLEGAL… HAHAHAHA”
    But then ignorance of law is never an excuse.

  6. May 30, 2008 10:24 am

    If we feel sad about the fate of our 25p and 50p coins, then look at what unfortunate Zimbabweans are going through:


  7. May 30, 2008 6:30 pm

    Since no one wants pennies around here, but you still need them to make up the correct amount, a lot of shopkeepers have a little tray out where you can leave the pennies you receive in change for the next person to use in making up correct amount. It seems to work well if you remember to use the free pennies. I always forget to use them though.

  8. May 30, 2008 6:57 pm

    even here in Bangalore I have had problems, with people not accepting 25np coins, infact some places I still get the old 10p and 20p coins, and I don’t understand why they cannot accept them

  9. May 30, 2008 11:59 pm

    BEST buses in Bombay- no problems with the 50 and 25p coins. Ever.

  10. Vivek Khadpekar permalink
    May 31, 2008 5:47 am

    Hi all concerned:

    One suggestion: Ask your MP to raise the question in parliament. If [s]he expects a bribe for doing this, pay it with several kilos (pooled from your several collections) of legal-but-not-accepted-in-the-market coins 🙂 .

  11. May 31, 2008 7:14 am

    vivek 🙂
    i havent faced much problems with the aath annas as we call them. char anna is a big problem
    id say collect them in 10yrs time their value might just appreciate
    Infact in rural areas it amazes me to see the kind of condition the notes that are in use are in
    they even tape and plastic seal them sometimes

  12. May 31, 2008 7:58 am

    I guess Chennai does not have this problem. I was quite surprised to see the canteen guy giving out 50p and 25p coins to me in the office. We all used to laugh because it was after a long time that we were seeing these coins as they are not available in shops in Delhi anymore.

  13. Vivek Khadpekar permalink
    May 31, 2008 8:50 am


    I, too, have not faced problems with the “adheli” as my parents’ and grandparents’ generation used to call it; except that sometimes the shopkeeper does not have it to give you as change, and tries to palm off a toffee or a peppermint instead. I collect them, and offer them back to the same shopkeeper as “currency” the next time. They can’t refuse, in all fairness. And if they do, I threaten to badmouth them in the neighbourhood. (The customer is King, remember!).

    As regards soiled and mutilated notes, RBI and some branches of SBI have special counters to replace them. Even the fancy non-nationalised, non-scheduled bank where I have an account has a board up saying that they will exchange damaged notes.

    It’s all a question of asserting yourself aggressively. That’s what good ol’ capitalism is all about.

  14. Vivek Khadpekar permalink
    May 31, 2008 10:41 am


    //But then ignorance of law is never an excuse.//

    So what did you do? Please finish your story 🙂 .

  15. May 31, 2008 10:17 pm

    I told him and he laughed aloud !

    I gave him those coins and left the shop. I did not want to waste time on an ignorant guy. 🙂

  16. June 2, 2008 7:10 pm

    in some places they will take 2 50p coins and stick them together with cellotape and use it as 1 1/- coin… you can try that.. or you could just walk to any PSU and drop a bag of coins there.

  17. June 2, 2008 7:11 pm

    btw not so long ago coins were in so much demand that shopkeepers used to pay a premium to get their hands on them…
    thanks to our finance ministers and high inflation the indian rupee is rendered worthless… the 100/- bill is worth 2 USD…

  18. Vivek Khadpekar permalink
    June 2, 2008 8:46 pm

    Ankur Aggarwal,

    //thanks to … high inflation the indian rupee is rendered worthless//

    On the contrary, my undrestanding until at least some weeks ago, was that the INR was strengthening against the USD, causing great concern to exporters because the dollar value of their receipts against exports was declining.

  19. Vivek Khadpekar permalink
    June 2, 2008 8:50 pm

    There is a silver lining to this cloud. KG and lower primary level maths can now exclude the decimal point, making life that much simpler for kids.

  20. rajesh tavkar permalink
    December 31, 2012 3:49 pm

    I would like to know legal provisions regarding acceptance of Indian currency in India. Is this an offence under any Act/Rule ? Many times Rs,. 500/1000 currency notes are refused by public transport conductors, railway staff etc. For insisting them to accept these notes one should know legal provisions for arguing authentically. . Please educate me if anybody knows the same. Thanks and regards.

  21. mahendra kamdar permalink
    January 27, 2015 12:53 pm

    HDFC Bank has put a limit of cash deposit in accounts with it. Can they really put such limit ? Can RBI issue guidelines to such banks on this issue please ?

  22. J.Thangchungnunga permalink
    March 22, 2017 8:27 pm

    Nowadays, because of the banks refusing to accept deposit of even ten rupees coins, many shopkeepers also have started following suit. This makes the issue of coins a mockery. Banks should not refuse to accept coins deposit, especially of higher denmination, so as not to create the impression of coins being no longer legal tender

  23. akash permalink
    June 5, 2017 6:15 pm

    on 5 th june 2017 in pune shop keeper are refuseing to take 10 rupee coin

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

%d bloggers like this: