P – NOTES
- January 20, 2021
- Posted by: OptimizeIAS Team
- Category: DPN Topics
P – NOTES
Context: Data show that ₹87,132 crore ($11.6 billion approx) worth of P-note positions were outstanding as of December 2020.
- 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.