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

Explanation:

The Hundi: A Financial Instrument 

The Hundi, also known as hundee, is a financial instrument that originated in Medieval India. It served various purposes in trade and credit transactions. Let’s explore its characteristics:

Sahyog Hundi

This type of hundi is drawn by one merchant on another, requesting the latter to pay a certain amount to a third merchant. The drawee (the merchant on whom the hundi is drawn) is considered creditworthy in the market. The sahyog hundi passes through multiple hands until it reaches the final recipient, who presents it to the drawee for payment.

Darshani Hundi

Similar to a demand bill, this hundi is payable on sight. The holder must present it for payment within a reasonable time after receiving it.

Muddati Hundi

A muddati or miadi hundi is payable after a specified period of time, akin to a time bill.

Other Varieties

Other varieties include Nam-jog hundi, Dhani-jog hundi, Jawabee hundi, Jokhami hundi, and Firman-jog hundi.

• Nam-jog hundi: Payable only to the person whose name is mentioned on the hundi, and it cannot be endorsed in favor of any other person.
• Firman-jog Hundi: Can be paid either to the person named in the hundi or to any person ordered by them.

These hundis served as remittance instruments, facilitated borrowing, and acted as bills of exchange in trade transactions. The Reserve Bank of India defines a 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”. Their use dates back at least to the Twelfth century in India. Although the British colonial government considered the hundi system traditional, it was not informal. Official hundi forms even incorporated revenue stamps bearing the image of British monarchs, and disputes between merchants were resolved through the court system.