Money market instrument

This topic has 1 reply, 2 voices, and was last updated 7 years ago by John Moffat.

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April 10, 2019 at 11:14 am #511647
alikhakar
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In banker’s acceptance (BA) instrument, is the firm issuing BA first required to deposit the money in bank before the bank issues the firm BA or
The firm will pay the bank later ..after the transaction is settled ..ie. after the bank has paid the other party ( holder of BA) the amount owed by the firm.
Thank you
April 10, 2019 at 1:19 pm #511665
John Moffat
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The amount is deposited with the bank when the BA is issued. From then on it is just like a cheque except it is guaranteed by the bank.
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