What is ‘Discounting of bills of exchanges’ ? – InterviewSolution

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1.	What is ‘Discounting of bills of exchanges’ ?
Answer» If the drawer of the bill does not want to wait till the due date of the bill and is in need of money, he may sell his bill to a bank at a certain rate of discpunt. The bill is endorsed by the drawer with a signed and dated order to pay the bank. The bank becomes the holder and the owner of the bill. After getting the bill, the bank will pay cash to the drawer equal to the face value less interest or discount at an agreed rate for the number of days it has to run. This is known as discounting of bills of exchange.

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