An instrument of exchange and credit which allows merchants to engage in long distance trade was called _____.
Answer & explanation
Correct answer: option 1
The correct answer is Option (1) → Hundi
Option (1) Hundi — Correct. Pre-colonial trading communities had their own systems of banking and credit. An important instrument of exchange and credit was the hundi, or bill of exchange (like a credit note), which allowed merchants to engage in long-distance trade: a hundi issued by a merchant in one place was honoured by a merchant of the same caste network in another.
NCERT (2025-26): “B astar, C hattisgarh … These traditional trading communities or castes had their own systems of banking and credit. For instance, an important instrument of exchange and credit was the hundi, or bill of exchange (like a credit note), which allowed merchants to engage in long-distance trade. Because trade took place primarily within the caste and kinship networks of these communities, a merchant in one part of the country could issue a hundi that would be honoured by a merchant in…” |