Indian Bill of Exchange System

Timeline

1. 1100–1300Gujarat and Rajasthan · GujaratJain and Hindu merchant communities developed a system of settling payments elsewhere via written instruments called hundi or hawala. Bills stated the amount, place of payment, and endorsement terms, operating through merchant credit networks and caste-based trust mechanisms.
2. 1300–1490Calicut and Aden · KeralaThe hundi system spread with Indian merchant networks to Malabar, the Persian Gulf, and the Swahili coast of East Africa. Merchants drew bills in Calicut and redeemed them in Aden or Surat, greatly reducing the risk and cost of transporting bullion on long-distance voyages.
3. 1491–1500Surat and Calicut · GujaratBy the late 15th century, hundi had become the standard settlement method in Indian Ocean trade, with merchant houses in Surat and Calicut frequently issuing and endorsing bills. On the eve of the Portuguese arrival in India, local and Persian merchants had established a mature cross-border credit system supporting bulk trade in pepper, cotton cloth, and gems.
4. 1600India and South Asia · IndiaDuring the East India Company period, hundi developed alongside bank drafts, and the British colonial government gradually brought it under formal financial regulation. Contemporary rural India and the informal sector still follow the hundi tradition, and modern bank draft systems are also influenced by it.