UPSC Prelims 2020 · Question 45 of 100
UPSC Prelims 2020 question on Hundi Bill of Exchange
- ExamUPSC CSE
- Year2020
- PaperGeneral Studies Paper I
- SubjectMedieval History
- TopicEarly Medieval India
- DifficultyMedium
- TypeDirect
Which of the following phrases defines the nature of the 'Hundi' generally referred to in the sources of the post-Harsha period?
Show answer
Answer: C. A bill of exchange
Verdict
Correct answer: A bill of exchange → Option (c).
Analysis
In India, instruments of credit have been in use since time immemorial and are popularly known as Hundies.
The movement of goods during the Medieval period was facilitated by the growth of a financial system which permitted easy transfer of money from one part of the country to another. This was done through the use of Hundis. The Hundi was a letter of credit payable after a period of time at a discount.
Statement by statement
Option (a) – INCORRECT: Royal advisories were issued through farmans or other documents, not Hundis.
Option (b) – INCORRECT: A daily accounts diary is not what a Hundi refers to.
Option (c) – CORRECT: A Hundi was essentially a bill of exchange used by merchants and traders for transfer of funds.
Option (d) – INCORRECT: Feudal orders to subordinates were not transmitted as Hundis.
Extra UPSC info
Hundis were widely used in medieval India by merchant communities like the Marwaris, Multanis, and Chettiars. Types of Hundis include Darshani Hundi (payable on sight) and Muddati Hundi (payable after a fixed period). The system continued well into the British period and was a precursor to the modern banking instrument.