Types, Features of Bills discounting

1. BILL DISCOUNTING
U.KALPANADEVI ( II-MBA)
MICHAEL INSTITUTE OF
MANAGEMENT- MADURAI

2. •BILL DISCOUNTING
When the seller (drawer) deposits genuine commercial
bills and obtains financial accommodation from a bank or
financial institution, it is known as bill discounting‘.

3. Features of bills discounting
1. Discount charge
2. Maturity
3. Ready finance
4. Discounting and purchasing

4. CONDITIONS
 A bill must be a usance bill.
 It must have been accepted and bears at least two good signatures (e.g.
of reputable individuals, companies or banks etc.)
 The Bank will normally only discount trade bills.
 Where a usance bill is drawn at a fixed period after sight the bill must be
accepted to establish the maturity.

5. CONDITIONS
 The discount should be based on real trade background.
 The discount tenor starts from the date of discount and expires
at the maturity of the bill.

6. Steps In Discounting And Purchasing
a. Examination of Bill
b. Crediting Customer Account
c. Control over Accounts
d. Sending Bill for collection
e. Action by the Branch
f. Dishonor

7. Advantages of Bills discounting
1. Easy access
2. Safety of funds
3. Certainity of payment
4. Profitability
5. Smooth Liquidity
6. Ideal investment
7. Relative stability of prices

10. THANK YOU...