Guidelines of RBI for Discounting/Rediscounting of Bills by Banks

Guidelines of RBI for Discounting/Rediscounting of Bills by Banks

The Reserve Bank of India (RBI) provides a bill rediscounting scheme to banks to help them meet their short-term liquidity requirements. Under this scheme, banks can rediscount eligible bills of exchange with the RBI at a concessional rate of interest.

The following are the guidelines of RBI for discounting/rediscounting of bills by banks:

  • Eligibility: Only usance bills drawn in Indian rupees and payable within 90 days from the date of acceptance are eligible for rediscount under the RBI bill rediscounting scheme. The bills must be drawn on a bank and must be in the prescribed form.
  • Percentage of eligible bills that can be rediscounted: Banks can rediscount up to 100% of the eligible bills held by them.
  • Rate of interest: The rate of interest charged by the RBI on rediscounted bills is lower than the bank rate. The current rate of interest is 4.25% per annum.
  • Procedure for rediscount: Banks can rediscount eligible bills with the RBI through their authorized dealers. The bills must be lodged with the authorized dealer in the prescribed form.

MCQs on Guidelines of RBI for Discounting/Rediscounting of Bills by Banks

  1. Which of the following bills are eligible for rediscount under the RBI bill rediscounting scheme?
    • Bills drawn in foreign currency
    • Bills payable within 180 days from the date of acceptance
    • Bills drawn on a non-bank
    • Bills not in the prescribed form
    • Answer: Bills drawn in foreign currency and bills payable within 180 days from the date of acceptance are not eligible for rediscount under the RBI bill rediscounting scheme.
  2. What is the maximum percentage of eligible bills that can be rediscounted by banks under the RBI bill rediscounting scheme?
    • 50%
    • 75%
    • 100%
    • 125%
    • Answer: Banks can rediscount up to 100% of the eligible bills held by them.
  3. What is the current rate of interest charged by the RBI on rediscounted bills?
    • 4% per annum
    • 4.25% per annum
    • 4.5% per annum
    • 5% per annum
    • Answer: The current rate of interest charged by the RBI on rediscounted bills is 4.25% per annum.
  4. How can banks rediscount eligible bills with the RBI?
    • They can rediscount the bills directly with the RBI.
    • They can rediscount the bills with their authorized dealers.
    • They can rediscount the bills with any bank.
    • They can rediscount the bills with any non-bank financial institution.
    • Answer: Banks can rediscount eligible bills with the RBI through their authorized dealers.