Question

What is the difference between discounting and rediscounting of bill?

Answer 1

• When a buyer approaches the bank to accept a bill, the bank pays to the seller after discounting the bill i.e. after charging interest on the bill for the number of days the buyer wish to have the credit. This is called discounting of bill.
• In case, if the bank requires money, it can send the bill to other financial institution. That institution (or bank) will accept the bill, rediscount it and pay to the previous bank.