What is the hundi system prevalent among the indian traders?

Hundi is a bill of exchange used as a credit note. This system was prevalent among specific trading communities in India. Hundi is a vessel that the Indian traders used to store money. Hundi is a small scale bank popular in north Indian villages Hundi was a kind of cooperative bank in colonial times.

Hundi is a bill of exchange used as a credit note. This system was prevalent among specific trading communities in India.

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 another place.