Banker's acceptance

A banker's acceptance is an instrument representing a promised future payment by a bank. The payment is accepted and guaranteed by the bank as a to be drawn on a deposit. The draft specifies the amount of funds, the date of the payment (or maturity), and the entity to which the payment is owed. After acceptance, the draft becomes an unconditional liability of the bank. Banker's acceptances are distinguished from ordinary time drafts in that ownership is transferable prior to maturity, allowing them to be traded in the secondary market.

Banker's acceptance

A banker's acceptance is an instrument representing a promised future payment by a bank. The payment is accepted and guaranteed by the bank as a to be drawn on a deposit. The draft specifies the amount of funds, the date of the payment (or maturity), and the entity to which the payment is owed. After acceptance, the draft becomes an unconditional liability of the bank. Banker's acceptances are distinguished from ordinary time drafts in that ownership is transferable prior to maturity, allowing them to be traded in the secondary market.