Which of the following statements are NOT true?
(A) Demand deposits are not legal tenders.
(B) Time deposits are legal tenders.
(C) Currency notes issued by the Reserve Bank of India are not legal tenders.
(D) Coins issued by the Government of India are legal tenders.
Choose the correct answer from the options given below:
Answer & explanation
Correct answer: option 2
The correct answer is Option (2) → (B) and (C) only
Only notes and coins are legal tender, since no one can refuse them. Bank deposits, demand or time, are not.
(A) Demand deposits are not legal tenders. — True. A cheque on a demand deposit can be refused.
(B) Time deposits are legal tenders. — False. Time deposits are bank deposits, not legal tender.
(C) Currency notes issued by the Reserve Bank of India are not legal tenders. — False. Currency notes are legal tender.
(D) Coins issued by the Government of India are legal tenders. — True. Coins are legal tender too.
NCERT (2026-27): “The Supply of Money : Various Measures In a modern economy money consists mainly of currency notes and coins issued by the monetary authority of the country. In India currency notes are issued by the Reserve Bank of India (RBI), which is the monetary authority in India. However, coins are issued by the Government of India. … Other deposits, e.g. fixed deposits, have a fixed period to maturity and are referred to as time deposits. … Currency notes and coins are therefore called fiat money. They do not have intrinsic value like a gold or silver coin. They are also called legal tenders as they cannot be refused by any citizen of the country for settlement of any kind of transaction. Cheques drawn on savings or current accounts, however, can be refused by anyone as a mode of payment. Hence, demand deposits are not legal tenders.” |