sight draft
sight draft
English Definitions:
sight draft, sight bill (noun)
a draft payable on presentation
sight draft
A banker's acceptance is a commitment by a bank to make a requested future payment. The request will typically specify the payee, the amount, and the date on which it is eligible for payment. After acceptance, the request 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.A banker's acceptance starts with a deposit in the amount of the future payment plus fees. A time draft to be drawn on the deposit is issued for the payment at a future date, analogous to a post-dated check. The bank accepts (guarantees) the obligation to pay the holder of the draft, analogous to a cashier's check. The draft holder may hold the acceptance until maturity and receive the face value payment from the bank, or it may sell (exchange) the acceptance at a discount to another party willing to wait until maturity to receive the bank's promised payment. Banker's acceptances are advantageous in transactions between unacquainted parties by reducing credit risk, and are used extensively in international trade for this reason. In an agreement whereby goods will be sold at a future date, if the buyer does not have an established relationship with or otherwise cannot obtain credit from the seller, a banker's acceptance enables it to substitute the bank's creditworthiness for its own.Banker's acceptances are typically issued in multiples of US$100,000, with a term to maturity between 1 and 6 months.
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"sight draft." Kamus.net. STANDS4 LLC, 2024. Web. 27 Apr. 2024. <https://www.kamus.net/english/sight+draft>.
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