Which of the following phrases defines the nature of the 'Hundi' generally referred to in the sources of the post-Harsha period ?

(a) An advisory issued by the king to his subordinates
(b) A diary to be maintained for daily accounts
(c) A bill of exchange ✓ UPSC's answer
(d) An order from the feudal lord to his subordinates

Why the answer is (c)

• A hundi was an indigenous bill of exchange — a written order by which merchants transferred money or credit across distances without carrying cash — option (c).

• Hundis appear in post-Harsha sources and flourished under the Delhi Sultanate and Mughals, when sarrafs (bankers) discounted and honoured them in different cities.

• They financed long-distance trade and even remitted State revenue; the Negotiable Instruments Act, 1881 still recognises them.

• It was not a royal advisory (a), an account diary (b) or a feudal order (d).

• Hence option (c).

Why the other options are wrong

(a) An advisory issued by the king to his subordinates: A hundi is a financial instrument, not a royal advisory.
(b) A diary to be maintained for daily accounts: It is not an account book.
(d) An order from the feudal lord to his subordinates: It is not a feudal order.

Asked in the GS Paper I of the UPSC Civil Services Preliminary Examination 2020, held on 4 October 2020. Question and answer key: Union Public Service Commission. Explanation: UPSC Answer Check.