Bill Discounting is a process where the financial institution gets the Bill of Exchange (Cheque / PO /DD etc.)

Bill Discounting is a process where the financial institution gets the Bill of Exchange (Cheque / PO /DD etc.) before its maturity date and below its par value. Hence the amount or cash realized may vary depending upon the number of days until maturity and the risk involved.

Discounting the bill of exchange is practiced to get the same immediately encashed before the maturity date. The liability in case of dishonor of the bill remains with the person in whose favor the bill is generated.

A commercial bill discount is an act by which the legal holder of a commercial bill (including banker's acceptance draft and commercial acceptance draft) transfers it to bank to acquire cash before its maturity date.

Just4uloan help you with the list of the banks and the contact details, which provides Bill discounting.

Bill disounting

While discounting a bill, the Bank buys the bill (i.e. Bill of Exchange or Promissory Note) before it is due and credits the value of the bill after a discount charge to the customer's account. The transaction is practically an advance against the security of the bill and the discount represents the interest on the advance from the date of purchase of the bill until it is due for payment.

Under certain circumstances, the Bank may discount a bill of exchange instead of negotiating them. The amount the Bank advances to you also depends on your past record and reputation of the drawee.

Usually, the Bank may want some conditions to be fulfilled to be able to discount a bill:

  1. A bill must be a usance bill
  2. It must have been accepted and bear at least two good signatures (e.g. of reputable individuals, companies or banks etc.)
  3. The Bank will normally only discount trade bills
  4. Where a usance bill is drawn at a fixed period after sight, the bill must be accepted to establish the maturity
  5. The advising or confirming bank will hide the reimbursement instruction from the beneficiary so that his bank must present the documents to the nominated bank for negotiation in order to obtain payment under the DC terms.
  6. Bills which are financed by the receiving branch, whether drawn under a DC or not, are treated as Bills Receivable by both the remitting branch and the receiving branches.

Presenting a bill


Bills may be presented to the nominated bank in two ways:

  1. Withrecourse
    We check the documents and confirm that they comply with the DC terms, and send the bill with the original DC to the nominated bank requesting payment. The nominated bank need not recheck the documents and it can claim a refund from us in the case of an unspotted discrepancy. We pay our customer after receipt of funds from the nominated bank.
  2. Withoutrecourse

    We pass the original DC and unchecked documents to the nominated bank on a collection basis, requesting payment. The nominated bank has to check the documents in the normal way. Usually, we present documents to the nominated bank without recourse:

    a. When the opening bank is a member of the Bank nominated for payment, acceptance or negotiation.

    b. When the nominated bank has confirmed the DC.

    c. When the nominated bank is the drawee.

The borrower and/or the guarantors have to provide the following documents to the banks or the lending institutions while submitting Overdraft against Gold Application. Certain documents may be demanded by the bank or the lending institutions in post sanction phase or on periodical basis.

  1. Address Proof : Latest Electricity/Telephone Bill or Receipt of Maintenance Charges or Valid Passport or Voter?s Identity Card or Purchase/Lease Deed/ Leave & License Agreement of Residence or Office Premises.
  2. Identity Proof : Valid Passport, PAN Card, Voter?s Card, Any other photo identification issued by Government Agencies.
  3. Business Proof : VAT/CST Registration No. or MIDC Agreement or SSI Permanent Registration Certificate or Warehouse Receipts or Shop & Establishment Act Certificate or Copy of Lease Agreement along with the latest Rent paid Receipt.
  4. Business Profile on Company?s Letterhead.
  5. Partnership deed in case of partnership firms.
  6. Certificate of incorporation, Date of Commencement of Business and Memorandum of Title Deeds, Form 32 in for Addition or Deletion of Directors in case of companies.

Last three years Trading, Profit & Loss A/c. and Balance Sheets (duly signed by a Chartered Accountant wherever applicable)

  1. Last one years? Bank statement of the Firm.
  2. If existing loan, then sanctioning letter and repayment schedule of the same.
  3. Firm/Company?s PAN Cards.
  4. Individual Income Tax Returns of the Individual/Partners/Directors for last three years.
  5. Last one years? Bank statement of Individuals, Partners, Directors.
  6. SEBI formalities in case of listed companies.
  7. Share Holding pattern of Directors duly certified by a Chartered Accountant.
  8. List of the Existing Directors of the company from the Registrar of the Companies.
  9. Written & approved confirmation of having No Legal Suit filed against any of the directors. If any such legal suit or proceedings are pending then the details of such legal suit or proceeding.

In India there are many Bank Lenders who provide Term Loan.

Process of this bank / lender is same.

  1. Application form is login.
  2. Personal Discussion is done by bank officer with customer.
  3. Bank's Field Investigation (All documents are Verify by bank which given with application form).
  4. Bank cheques CIBIL report.
  5. Sanction Letter.
  6. Signing of agreements and submitting post-dated cheques.
  7. Disbursement.