Which of the following phrases defines the nature of the ‘Hundi' generally referred to in the sources of the post-Harsha period? (UPSC 2020)
✓ Correct answer: c) A bill of exchange
ExplanationA bill of exchange Hundis: The Hundis was a letter of credit payable after a period of time at a discount.The word "hundi" is derived from the Sanskrit word "hundika," which was first used in 914 AD..The Lekhapaddhati and Kalhan’s Rajatrangini (12th century) refer to the use of hundika by kings and nobles to make payments but it may have been used by merchants as well.Hundis are used as a form of remittance instrument to transfer money from place to place, as a form of credit instrument or IOU to borrow money and as a bill of exchange in trade transactions.The Reserve Bank of India describes the Hundi as "an unconditional order in writing made by a person directing another to pay a certain sum of money to a person named in the order." The hundi was a piece of paper, usually written in Hindi or any other Indian language, promising the payment of a sum of money to the bearer at a particular place either immediately or afterwards.The darshani hundi was paid at sight whereas the miyadi hundi was redeemed after a stipulated period of time.It was called a bill of exchange because the device was originally associated in Europe with the exchange of foreign currencies given at one place and taken at another. | | UPSC Two types of hundis were popular in medieval India: one which was an instrument of money transfer and the other which was an instrument of credit.It was the first type that was used by the bankers to accumulate capital.If a businessman decided to send money from one place to another, he could deposit the cash with a Sarraf in exchange for a hundi and avoid risks of transportation.
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