Published: 4th Aug, 2023
Context
After messages on social media that claimed that currency notes with ‘an asterisk or star mark’ in the number panel are fake, the Reserve Bank of India clarified that such banknotes are’ legal tender’ and that the symbol is an identifier that the note is a replacement for defectively printed ones.
What Is Legal Tender?
- Legal tender is anything recognized by law as a means to settle a public or private debt or meet a financial obligation, including tax payments, contracts, and legal fines or damages.
- The national currencyis legal tender in practically every country.
- A creditor is legally obligated to accept legal tender toward repayment of a debt.
About the ‘STAR series numbering system’:
- The symbol is inserted in the number panel of a banknote that is used as replacement for defectively printed notes in a packet of 100 pieces of serially numbered banknotes.
- A banknote with a star (*) symbol is identical to any other legal banknote, except that in the number panel a star (*) symbol is added between the prefix and the serial number.
- As a part of the Bank’s on-going efforts to benchmark its procedures against international best practices as also for cost-effectiveness at printing presses, it is proposed to adopt the STAR series numbering system for replacement of the defectively printed banknotes.
- Features:
- The Star series notes will look exactly like the existing notes of 10, Rs.20 and Rs.50 in the Mahatma Gandhi series but will have an additional character viz. a *(star) in the number panel.
- Packets with star series notes will have 100 pieces as usual but not in serial order.
- The Star series notes will be legal tender and members of public may freely accept and use these notes.
Need
- To replace defectively printed banknote: When a defect is detected, these banknotes are replaced with new ones having the same serial number, ensuring the sequential order in the packet is maintained.
- International best practices: The star series numbering system is part of RBI's efforts to follow international best practices and ensure cost-effectiveness at printing presses.
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What Is Legal Tender?
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