Authentic Past Paper Standard Evaluation
Which of the following phrases defines the nature of the 'Hundi' generally referred to in the sources of the post-Harsha period?
Solution & Analysis
Answer: C
Concept
Pre-modern banking and trade relied on indigenous credit instruments to facilitate long-distance commerce without the physical transfer of large amounts of gold or silver.Explanation
Historical texts on Indian commerce define '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.Logical Breakup
Logic 1: A Hundi functioned as a 'Bill of Exchange'. It allowed merchants to deposit money in one city and receive it in another, reducing the risk of robbery on trade routes.
Logic 2: It often included an element of insurance (bima) and was a key part of the 'Sarraf' (money changer) system in Medieval India.