Difference between trade bill and accommodation bill.

Question

Asked: July 19, 20202020-07-19T19:53:25+05:30 2020-07-19T19:53:25+05:30In: UPSC CSE

Difference between trade bill and accommodation bill. Define trade and accommodation bills separately.

Rathore · Accepted Answer · 2020-07-19T20:21:43+05:30

Trade Bill	Accommodation Bill
Those bills which we draw and accept for same consideration are trade bills.	Those bills which we draw and accept without any consideration.
These bills are enforceable by law.	Trade bills are not legally enforceable.
Trade bills reflect debt acknowledgment.	These bills do not reflect debt.
When bill is dishonored the drawer can sue.	If bill is dishonored drawer cannot sue.
Loss is borne only by drawer, by way of discounting the bill.	Loss by way of discounting the bill will be shared by drawer and drawee in the proportion of their sharing in the bill ‘s proceeds.

These bills are drawn and accepted without consideration.
Also, such bills are drawn in bill of exchange for the financial assistance of one or both of the parties.
Mainly imaginary bill.
Often misused for raising a loan.
Bankers often don’t want to buy accommodation bills.