Precautions By – Banks ,NBFC :

• Goods covered by documents are those in which the company is dealing.

• The amount of bill should match with business turnover of the company.
• The bills drawn on the places where discounting agencies is operating or have a
branch office as it would facilitate contact with the drawee in case of urgency .
• The credit report on the drawee is satisfactory.
• The goods covered under the bill are not of perishable in nature.
• The bills have been drawn in favor of finance company and accepted by the
drawee.
Bill Market Scheme 1970 :

• Recommendation made by Dahejia Committee

• New Bill Market scheme was introduced to facilitate the rediscounting

eligible B/E by banks to RBI.
Salient Features of Bill Market Schemes :
1. Eligible Institutions:
• All licensed scheduled banks and those which don’t require license
(i.e State Bank of India and its associates and nationalized bank).
• All above banks are eligible to rediscount bill of exchange with RBI
2. Eligibility of Bills:
• It is determined by the statutory provisions embodied in Section 17(2)(a) of RBI
Act.
• It authorises the purchase, sale and discount of bills of exchange and promissory
notes, drawn on and payable in India , bearing two or more signatures .
• One of which should be the scheduled commercial bank or state cooperative bank.
• In case of transaction related to Export of goods from India, within 180 days.
• In other cases within 90 days from the date of purchase.
• It is confined to genuine trade bills arising out genuine sale of goods.
3. Additions/Developments in this scheme:
• Setting up Discount and Finance House of India (DFHI).
• Remission of Stamp duty on bills drawn/made by /in the favour of the bank.
• Reduction in discount rates of usance bills .
• The re-discounting facility from RBI has gradually slowed down and encouraged
rediscount with one another bank and approved financial institutions (e.g. LIC,
GIC, ICICI etc.)