What do you mean by discounting of bills by bank?

2 years ago
Banking

Banks purchase the bills at face value minus interest at current rate of interest for the period of the bill. This is known as ‘Discounting of bills’. Bills of exchange are negotiable instruments and enable the debtors to discharge their obligations towards their creditors, such bills of exchange arise out of commercial transactions both in internal trade and external trade. By discounting these bills before they are due for a nominal amount, the banks help the business community.

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Susmita Sah
Susmita Sah
Jan 16, 2022
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