Banker’s Acceptance (BA)

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DefinitionThe banker’s acceptance, also known as bill of exchange, is a bank draft that requires a bank to pay a holder of an instrument a stated amount on a specified date. This usually occurs with commercial banks, and the specified date is normally 90 days from the date of issue with a few exceptions of 180 days. In most cases, the banker’s acceptance acts as a post-dated check and it is issued by a bank as a guarantee of payment rather than an account holder. It can also be used as a short-term debt instrument that can be traded at…
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