Bill Discounting is a process where the financial institution gets the Bill of Exchange (Cheque / PO /DD etc.) before it's maturity date and below its par value. Hence the amount or cash realized may vary depending upon the number of days until maturity and the risk involved.
Discounting the bill of exchange is practiced to get the same immediately encashed before the maturity date. The liability in case of dishonor of the bill remains with the person in whose favor the bill is generated.
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