Hundis are indigenous negotiable instruments like bills of exchange or promissory notes in form and substance, written in vernacular language. Though Hundis are not recognised by Negotiable Instruments Act, Hundis are considered valid as Negotiable Instrument, as per local usages and customs.

Kinds of hundis

There are two main kinds of hundis :

  1. Darshni hundi, i.e., a hundi payable at sight.
  2. Muddati hundi or Miadi hundi, i.e., a hundi payable after a specific period.

Types of Hundis

Hundies may also be classified as follows:

  • Shah jog hundi : It is payable to shah (i. e, a respectable person).The payment can be made only if a Shah presents the hundi to the drawee. It can be freely transferred from one person to another by mere delivery and no indorsement is required.
  • Nam jog hundi : It is payable to a specified person named in the hundi or to his order. Thus it is quite similar to a bill of exchange payable to order.
  • Dhani jog hundi or dekhandar hundi : It is payable to the holder or bearer. Thus it is quite similar to bills of exchange payable to bearer.
  • Firman jog hundi : It is payable to order. It can be negotiated by indorsement and delivery.
  • Jawabee hundi : It is used for remitting money from one place to another. The payee, on getting the money has to send an answer to the remitter.
  • Jokhami hundi : A jokhami hundi is payable to buyer of goods with conditions stipulated. It like a combination of Bill of Exchange and Insurance policy.

General terms

  • Zickri chit : It is a letter of introduction given by the drawer or some prior party to the holder of the hundi, addressed to some respectable person residing in the area where the hundi is payable, requesting him to pay the amount of the hundi in case the drawee refuses to Accept or pay the amount of the hundi  In such a case the person addressed in the letter accepts the hundi and pays it at maturity. Thus he is like an acceptor for honour.
  • Khoka : When a hundi is paid up and cancelled, it is called a khoka.
  • Peth : The duplicate of a hundi when the original is lost, is called peth. The duplicate of a duplicate is called perpeth.


Jokhami Hundi

Ex.7.1 A sells goods worth Rs.2,500 to B and draws a jokhami hundi on B  asking B to pay the amount to the holder of the hundi. B accepts the hundi on condition that the payment will be made only on the receipt of the goods. A discounts the hundi with C, an insurer. C pays the amount of hundi (after deducting his insurance premium) charges for risk involved in the carriage of goods from the seller to the buyer and interest. If the goods reach B, the buyer, safely, then C becomes entitled to claim the amount. If goods are lost in transit, the loss falls on the insurer(C).

Click Here for PDF