Bankers' acceptance
A bankers' acceptance, or BA, is a time
draft drawn on and accepted by a
bank. Before acceptance, the draft is not an obligation of the bank; it is merely an order by the drawer to the bank to pay a specified sum of money on a specified date to a named person or to the bearer of the draft. Upon acceptance, which occurs when an authorized bank accepts and signs it, the draft becomes a primary and unconditional liability of the bank. If the bank is well known and enjoys a good reputation, the accepted draft may be readily sold in an active
market. A bankers acceptance is also a
money market instrument – a short-term discount instrument that usually arises in the course of
international trade.
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banker's acceptance
Noun
1. banking: a time draft drawn on and accepted by a bank
(synonym) acceptance
(hypernym) draft, bill of exchange, order of payment
Banker's Acceptance
A short-term credit investment created by a non-financial firm and guaranteed by a bank as to payment. Acceptances are traded at
discounts to
face value in the
secondary market. These instruments have been a popular investment for
money market funds. They are commonly used in international transactions.
Banker's Acceptance
a draft drawn on and accepted by a bank. Depending on the bank's credit worthiness, the acceptance becomes a financial instrument which can be discounted.
Banker's Acceptance
A short term credit instrument consisting of a bill of exchange draft, payable at maturity, which is drawn by a creditor against his or her debtor. A banker's acceptance is often used by persons in international trade and may be sold on market at a discount.
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