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What is Banker’s Acceptance?

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In the series of learning money market instruments we are going to talk about bankers acceptance what is bankers acceptance, now what exactly is bankers acceptance it is basically a document which promises future payment which is guaranteed by a commercial bank which is similar to a Treasury bill now Treasury bill is released by RBI.

However a banker’s acceptance is given by a commercial bank this is the difference between a Treasury bill and bankers acceptance when banker acceptance is a document which promises future payment, in fact, it is guaranteed by the commercial bank now bankers acceptance is often used in money market funds and specifies the details of repayment like the amount to be repaid the date of free payment and the details of individuals to which the repayment is due now you can rather say that.

This is a document which gives the entire details of the transaction the agreement which has happened between two people in which the details of the repayment that is after how much time the customer will make the payment maybe seven years five years depending upon the agreement which is being accepted and agreed upon the amount which will be repaid.

whether it’ll be repaid quarterly monthly half-yearly annually the date of repayment it could be monthly frequency quarterly frequency and the details of individuals to which the repayment is done now bankers acceptance features maturity period ranging from 30 days to 180 days so it is also a money market instruments which people can use to borrow money from the market money market which ranges from a duration of 30 days to 180 days so I’m sure this would you would have certainly given your great insight on what exactly is bankers acceptance in how you can use this tool as a tool to get money from the money market.

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