Section 31 of the RBI Act
No one in India, other than the Bank or, as specifically empowered by this Act, the Central Government, shall draw, accept, make, or issue any bill of exchange, hundi, promissory note, or engagement for the payment of money payable to bearer on demand, or borrow, owe, or take up any amount or sums of money on any such person’s bills, hundis, or notes.
Cheques or drafts, including hundis, payable to the bearer on demand or otherwise may be drawn on a person’s account with a banker, shroff, or agency.
Negotiable Instruments Act 1881 : Definition, Kinds & Features
The Negotiable Instruments Act (NI Act) is a cornerstone of commercial law, establishing a strong legal framework for the regulation of numerous financial instruments essential to business and trade. The NI Act, enacted in 1881 in India, resolves the complexity of negotiable instruments by providing clarity and uniformity in their use, transfer, and enforcement. The NI Act establishes the rights, duties, and obligations of persons participating in negotiable instruments, promoting openness and fairness in economic transactions. Its provisions control the development, negotiation, and execution of these instruments, guaranteeing legal compliance and fostering trust in the financial system.
Geeky Takeaways:
- A negotiated instrument is a written contract that promises a certain payment to a designated person or holder of the instrument.
- The Negotiable Instruments Act 1881 established a regulatory framework for all sorts of negotiable instruments.
- Negotiable instruments include crucial data such as the principal amount, interest rate, and date, and are signed by the payor.
- Negotiable instruments are easily transferred to multiple parties, and the new holder will receive complete legal ownership of the instruments.
Table of Content
- Negotiable Instruments Act 1881
- Kinds of Negotiable Instruments
- Section 31 of the RBI Act
- Characteristics of Negotiable Instruments
- Conclusion
- Negotiable Instruments Act 1881- FAQs