The discounting of bills (called hundis in Indian parlance) are a widely used source of short-term finance in the Indian corporate sector. This facility is provided by commercial banks as well as by private sector financial companies. The minimum charge for bill discounting tends to vary according to the credit-worthiness of the companies. The bill discounting limit for each company is part of its total working capital limit. Bill discounting facilities cannot be provided by any banks outside consortium arrangements.
Effective 29th April 1995, rediscounting of commercial bills would be reqiured for a minimum period of 15 days.
Centre for Monitoring Indian Economy, Bombay
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Last updated: August 1995.