Bill of Exchange
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There are 3 parties in the bill of ExchangeRegulated market place where capital market products are bought and sold through intermediaries. .
BEO is a written negotiable Instrument which contains an unconditional order which is
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Signed by the Maker
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Directs a certain person to pay
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Certain sum of Money only to
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Certain person or the bearer.
The parties are Drawer, Drawee and Payee.
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Drawer: The person who orders to pay
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Drawee: The person who is directed to pay
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Payee: The person who is authorized to obtain a payment
Please note that A minor can be a Drawer but not a Drawee because he can not incur liability.
Once the Drawee accepts the BOE, he becomes acceptor.
Inland Bill & Foreign Bill
A bill that is drawn in India and paid in India or out of India to a person, who is in India, whether Indian or Foreigner, is Inland Bill. Simply, a bill drawn in India and paid in India is a Inland Bill.
A bill which is NOT drawn in India but is payable in India to a person, who is in India and is Indian or a foreigner is a Foreign Bill.
Hundi:
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Hundi is the Desi version of a bill of Exchange.
They are used conventionally, not stamped and a vernacular language is written on them. They are still in use and are governed by local practices only.
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Darshani Hundi is akin to a Demand Promissory NotePN means a paper with a writing which has a promise. But it does not mean that we write "I owe You" and it becomes .....
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Miadi Hundi is akin to a Usance Promissory Note
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Khoka is also a Hundi which refers to a bill of exchange that has been paid and canceled.
BOE , as per the NI act are charged at the rate of 18% per annum interest.
