Question

What is the difference between Cheque and Hundi?

Hint:

Cheque = Modern, regulated. Hundi = Traditional, customary.

Answer 1

Step 1: Meaning of Cheque.
A cheque is a negotiable instrument drawn on a bank, directing it to pay a certain amount to a specified person.
Step 2: Meaning of Hundi.
A Hundi is a traditional Indian financial instrument used as a bill of exchange or promissory note, often outside the formal banking system.
Step 3: Key Differences.
1. Cheque is issued under the Negotiable Instruments Act; Hundi is based on custom and practice.
2. Cheque is always drawn on a bank; Hundi may be drawn on individuals or firms.
3. Cheques are used widely in modern banking; Hundis are traditional and less formal.
Step 4: Conclusion.
Thus, while both are negotiable instruments, cheques are modern and regulated, whereas Hundis are traditional and customary.