Law · Negotiable Instruments & RBI Act
Statement 1: A bill of exchange is a formal written document where the drawer directs the drawee to pay a certain sum of money to the payee under the Negotiable Instruments Act. Statement 2: When a bank discounts a usance bill, it effectively buys the debt at a price lower than its face value, providing immediate liquidity. Statement 3: Under Section 31 of the Reserve Bank of India Act, 1934, no person other than the RBI or the Central Government can draw, accept, make or issue any bill of exchange or promissory note payable to bearer on demand. Which of the following summaries regarding these statements is most accurate?
Verified Solution4 OptionsUpdated: October 2026👁️1 View
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- 1Statement 3 is the only true statement because the other two fail to mention stamp duty.
- 2Only Statement 2 is true, while Statement 1 and Statement 3 are false.
- 3All three statements are true, highlighting the definition, commercial utility, and statutory restrictions on bearer demand instruments.✓
- 4Statement 1 and 2 are true, but Statement 3 is false because Section 31 applies only to promissory notes.
Correct answer
All three statements are true, highlighting the definition, commercial utility, and statutory restrictions on bearer demand instruments.
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