P – NOTES

Subject: Economics

Context: Data show that ₹87,132 crore ($11.6 billion approx) worth of P-note positions were outstanding as of December 2020.

Concept:

A promissory note is an instrument in writing (not being a bank note or a currency note) containing an unconditional undertaking, signed by the maker, to pay a certain sum of money only to or to the order of a certain person or to the bearer of the instrument.
In a promissory note there are two parties the maker of the note and the payee.
The PN can be Demand Promissory Note or Usance Promissory Note.
Demand Promissory Note has to be paid immediately on demand and Usance Promissory Note has to be paid after certain time period.
In a promissory note there is a promise to make the payment whereas in a bill of exchange there is an order for making the payment.
Also, a promissory note requires no acceptance as it is signed by the person who is liable to pay. The drawer of a bill of exchange is generally the creditor of the drawee and therefore it must be accepted by the drawee before it can be presented for payment.