2017-02-11 Sat

Love is in the air and there are few who frankly don’t care! :P

If this Valentine Week is a tad bit too much for you, here’s an article which will give an economic or Notaphilist twist to the romantic “Promise Day”.

Well...today, 11th February 2017, will be celebrated as Promise Day and many people will be exchanging their vows. In the festive spirit let’s take a look at our banknotes issued by the Reverse Bank of India (RBI). If you have ever seen our notes with a keen eye you would have noticed that the Governor of RBI “Promises” something on each note that is issued!

Banknotes issued by RBI from 1970 onwards have the promissory clause on the obverse which reads as “I PROMISE to pay the bearer the sum of ___ rupees”.

This promissory clause means that the banknote is a legal tender for the specified amount. The obligation on the part of the Bank is to exchange a banknote with bank notes of lower value or other coins which are legal tender under the Indian Coinage Act, 2011, of an equivalent amount. Also as per Section 26 of Reserve Bank of India Act, 1934, the Bank is liable to pay the value of banknote.

However, what is a banknote? Is it any different from currency notes?
For answers read an article on banknotes and currency notes.

And as far the promise of the Governor of the RBI is concerned, why do we need it?
This promise makes the banknote an official legal tender of India which should be accepted by all. This helps in hassle free use of currency in the whole country, since anyone who bears the note can go to RBI and get it redeemed. Meaning that this legal tender is a medium of payment allowed by the law or recognized by a legal system as valid for meeting any financial obligation.

Well...according to us this is the most important “Promise” that we get from our National Bank, isn’t it?

(Information courtesy: RBI’s official website).