Question

Distinguish between:

Legal Tender Money and Non-Legal tender Money.

Answer 1

Legal Tender Money	Non-Legal Tender Money
(i) Legal Tender Money is the money that is backed by law and refusal to accept will be punishable by law.	(i) Non-legal tender money is the money that is generally used by people but there is no legal compulsion to accept it.
(ii) It is issued by the Central bank of the country.	(ii) It is issued by commercial banks.
(iii) It is freely accepted as a medium of exchange.	(iii) It is not legal tender money. No one can force you to accept it.
(iv) Currency notes issued by RBI in denominations ₹ 5, 10, 20, 50, 100, 200, 500, 2000 are legal tender money.	(iv) Negotiable instruments such as cheques, bank drafts, bills of exchange are nonlegal tender money.