HISTORY OF TRADE AND COMMERCE
 

❖ Indigenous banking system in Indian Subcontinent

• Metals as Money: Initially, the metals were used as money due to the high durability and divisibility.
• Use of Hundi and Chitti: Hundi and Chitti were financial instruments which were used for carrying out trade and credit transactions during the Medieval period in India. A Hundi is primarily an unconditional contract or order which warrantees a monetary payment which can be transferred by valid negotiation.
• Development of banks: With the use of currency and letter of credit, the Indian banking system started lending money and financing the domestic and foreign trade in India. Along with this, the development of banking system also encouraged people to deposit precious metals with the lending authorities such as bankers, Seths, etc.
• Agriculture and livelihood opportunities: In the Indian subcontinent, agriculture and the domestication of animals were important sources of livelihood. Along with this, people also relied on other sources of earning a livelihood such as weaving cotton, dyeing fabrics, making clay pots, etc.
• Role of Intermediaries: The intermediaries and other institutions such as Jagat Seths, played an important role in the promotion of trade, commerce and banking in India.
• Credit transactions: With the development of credit facilities and availability of loans and advances, the commercial activities and operations enhanced and the Indian subcontinent started enjoying the benefits from a favourable balance of trade.
• Evolvement of indigenous banking: The indigenous banking system not only benefitted the manufacturers or traders by facilitating trade but they also helped those merchants with additional funds who were looking for expansion and development. Later on, with the evolvement of commercial and industrial banks, the banking system also started providing both short term and long term loans to finance the agricultural projects in India.
 
❖ Different types of Hundi used by traders
a. Dhani-jog: This type of Hundi is payable to any person without putting any liability over the person who receives the payment. The broader function of Hundi is Darshani.
b. Sah-jog: This type of Hundi is payable to a specific person, especially someone who is deemed as respectable while putting a liability over the person who receives the payment. The broader function of Hundi is Darshani.
c. Firman-jog: This type of Hundi is payable on order. The broader function of Hundi is Darshani.
d. Dekhan-har: This type of Hundi is payable to the presenter or the bearer. The broader function of Hundi is Darshani.
e. Dhani-jog: This type of Hundi is payable to a person (called Dhani, who purchases it) without putting any liability over who receives the payment. However, the payment is done over a fixed time period. The broader function of Hundi is Muddati.
f. Firman-jog: This type of Hundi payable to order following a fixed term. The broader function of Hundi is Muddati.
g. Jokhmi: This type of Hundi is drawn against dispatched goods. Herein, in case the goods are los…