What is Hundi/Poorja -
A Hundi may be defined as a bill of exchange drawn in a vernacular language in accordance with the custom of local merchants. In fact, the term "hundi" is a derivative of the Sanskrit word "hund" which means "to collect".
A trader or manufacturer who has no or little access to banks still makes out a hundi which is governed by customs and usages prevailing in their mercantile community, and in some cases, also by the Negotiable Instruments Act 1881. The Act Applies to hundies where no such custom has been established.
Kinds of Hundies -
There are two kinds of Hundis/Poorja.
(1) Darshani Hundies -
(2) Muddati Hundis / Miadi Hundies -
(1) Darshani Hundies -
Darshani Hundies are payable at sight. These are transferable by endorsement and pass freely through many hands amongst the indigenous bankers.
(2) Muddati Hundis / Miadi Hundies -
These types of Hundies are payable after sight or a certain time after presentment, generally 61 or 91 days. In drawing such a hundi, it is the usual practice to charge interest for the period specified.
See Also...
1) What is bank Draft? What are the Characteristics of Bank Draft
2) Parties to Negotiable Instrument | Banking Law
3) Articles of the Universal Declaration of Human Rights and the Constitution of India
4) Management of Reserve Bank of India (Section 7 of RBI Act)
5) Compensation on Dishonor | Banking Law
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