Report on the procedure of discounting and collecting Hindies (Bills of Exchange)
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Report on the procedure of discounting and colleting hundies (Bill of exchange)
Bill Financing – Historical Perspective
Commercial Bill, which had its origin in Europe is an early medieval financial innovation evolved over centuries – from a personal bond executed by debtor before a Court or a public notary to its present form of a commercial financial instrument - acquiring at various stages of evolution its distinctive characteristics of easy transferability and negotiability, and thus lending itself to discounting by banks to provide liquidity to the holder. With the rapid growth in international trade, bill became the principal instrument of settlement in international trade. In India, too, indigenous bankers and other…show more content… In this context, it would be pertinent to mention, that discounting of usance bills of exchange to finance domestic trade, as obtaining in our country, seems to be losing its relevance in most other countries. In developed markets like U.K., USA, Europe, Australia, Germany, New Zealand etc., bill discounting facility, as a product, as commonly understood in India is not in use.
3.1 In India, the major reason cited for the non-development of bill financing is the hesitation of the industry and trade to subject themselves to the rigours of bill discipline. The Group recognizes that vendor payment discipline of a company is an indicator of the ethos of the management of the company and is sine-quo-non for the development of bill culture, which pre-supposes the willingness of trade and industry to subject themselves to the strict commitment to honour financial obligations on the contracted date. Operational and procedural hassles currently obtaining in banking system too are said to impede the growth of bill financing even amongst those business segments where it has found acceptance. These apart, commercial transactions are now generally tending to be more in the nature of