Definition
Bill Discounting is a financial service where a bank buys a business’s bill or invoice before its due date at a discounted value.
How It Works
Businesses use it to get quick cash instead of waiting for customers to pay. The bank collects the full payment later from the customer.
Example
If a business sells goods on credit for ₹1,00,000 payable after 60 days, the bank may pay ₹98,000 today and recover ₹1,00,000 later, earning ₹2,000 as profit.
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