Chapter – 1 BUSINESS, TRADE & COMMERCE Introduction All human beings require different

types of goods and services to satisfy their needs. The necessity of supplying goods and
services has led to certain activities being undertaken by people to produce and sell what is
needed by others. Business is a major economic activity in all modern societies as it is
concerned with the production and sale of goods and services to the needy people. SECTION 1
History of Trade and Commerce Trade and commerce have played a vital role in making India to
evolve as a major actor in the economic word in ancient times. Commercial cities like Harappa
and Mohenjodaro were some examples for the business development of ancient India. These
civilizations had established commercial connections with Mesopotamia and traded in gold,
silver, copper, gemstones, beads, pearls, sea shells etc. There were different types of coins and
weighing practices during that time. Indigenous Banking System As economic life progress,
metallic money had been introduced which in turn accelerated the economic activities.
Documents such as Hundi and Chitti were in use for carrying out transactions in which money
passed from hand to hand. Hundi as an instrument of exchange, it involved a contract which
warrant the payment of money, the promise or order which is unconditional and capable of
change through transfer by valid negotiation. Indigenous banking system played a prominent
role in lending money and financing domestic and foreign trade with currency and letter of
credit. With the development of banking, people began to deposit precious metals with lending
individuals functioning as Bankers or Seths. Hundies practiced by Indian Merchant Communities
Name of Hundi Category Function Dhani-jog Darshani Payable to any persons – no liability over
who received the payment Sah-jog Payable to a specific person (someone respectable).
Liability over who received the payment. Firman-jog Payable to order Dekhan-har Muddati
Payable to the presented or bearer. Dhani-jog Payable to any person – no liability over who
received the payment, but payment over a fixed term. Firman-jog Payable to order following a
fixed term. Jokhmi Drawn against dispatched goods. If goods lost in transit, the drawer or holder
bears the costs and the drawee carries no