QUESTION

Medium

Medieval History

Prelims 2020

Which of the following phrases defines the nature of the ‘Hundi’ generally referred to in the sources of the post-Harsha period?

Select an option to attempt

Explanation

The phrase that best defines the nature of the Hundi generally referred to in the sources of the post-Harsha period is: A bill of exchange.

Hundi as a Financial Instrument: Hundis were instruments used in trade and credit transactions during the medieval period in India.

Functions of a Bill of Exchange: A bill of exchange is a written order issued by one person (drawer) to another (drawee) to pay a specified sum of money to a third party (payee) at a future date. This aligns with the functionality of a Hundi.

Merchants used Hundis to facilitate trade by

Securing Payments: They could issue a Hundi to the seller upon receiving goods, instructing their bank or agent (drawee) at the seller's location to pay the specified amount.
Obtaining Credit: Merchants could also use Hundis to obtain credit. They could draw a Hundi against future earnings and have it discounted by a money lender for immediate cash.

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