2024 Author: Howard Calhoun | [email protected]. Last modified: 2023-12-17 10:16
Most people who have used the services of banks at least once know about the bank's credit and deposit programs, the possibility of making various payments, and the like. But in fact, there are many more banking services that these financial institutions provide, for example, securities transactions, various guarantees. Let's figure out what acceptance is in a bank and what it is used in financial transactions, how the bank sets the rate.
The concept of acceptance
First of all, let's start with the concept, having familiarized ourselves with which, it will be possible to move further. Bank acceptance is a kind of document that is used in some international settlement transactions. It allows a company to use not only its business reputation, but also the bank's rating due to the fact that the bank undertakes to pay a certain amount to the bearer of the acceptance.
Accordingly, if the bank is well-known to everyone, has the trust of people and various organizations, then its services in international operations will be very usefulcompanies that do not have such fame. That is, it is beneficial for companies to conclude deals with external partners, and it is good for the bank that it earns on its reputation.
Acceptance at the bank is the ability of the buyer to make a transaction with partners faster. But in order to be able to use such a security, the buyer himself must meet certain requirements that are set by the bank.
These can be not only requests of an individual nature that the bank develops for its clients based on the experience of conducting such operations, but also legal requirements determined by government regulators.
The bank's acceptance is a kind of credit guarantee - the buyer, as it were, borrows a certain amount from the bank along with the acceptance, undertaking to repay it before the expiration of a certain date. He can buy anything for the specified amount using the acceptance. At the same time, the bank undertakes to pay money on this paper to the bearer.
Preliminary and subsequent acceptance
Acceptance may be preliminary or subsequent.
When presenting a preliminary acceptance, the payer must resolve the issue on out-of-town accounts within three days and within one day on intra-city ones.
The payment request for subsequent acceptance is paid immediately, but the payer has 3 days left to verify the correctness of the money transfer. If necessary, it is possiblerefuse acceptance.
How does a bank determine its acceptance rate?
When calculating the rate for one or another acceptance, the bank, first of all, determines the cost at which it can sell it on the free market. For example, for doubtful acceptances, the banking institution must set a rate that will compensate for possible losses.
That is, the bank must guarantee itself a certain amount of reservation, so as not to damage its solvency and liquidity of assets.
Benefits of a financial service
Due to the fact that it is issued by a serious financial institution, which is a bank, the fulfillment of obligations by the parties to such relations is guaranteed. This gives confidence to all contracting parties, which is especially important for creditors.
In addition to the fact that bank acceptance helps to conclude transactions at the international level, such transactions are mainly carried out by banks that have an international status. Moreover, everyone understands that the bank will not give an acceptance to anyone just like that, but will do this only if it is 100% sure that the buyer will fulfill its obligations.
For the buyer, the acceptance of the bank is no less beneficial than the other parties to the relationship. Firstly, thanks to the received bank guarantees, the scope of such a security for settlement transactions is quite wide. Secondly, given the time frame during which the buyer will have to repay the debt, he can have time to buy goods,earn on their sale and then pay out the funds for the obligations assumed to the bank. That is, literally speaking, you can make money with this security.
Other uses
In addition to the above methods of application, bank acceptance can bring profit in another way. There are cases when a banking institution sells its own acceptances, forming them into independent assets. In this case, using a small discount, the bank manages to quickly find a buyer, since the latter will earn on the difference between the purchase amount and the nominal value of the acceptance.
This result is beneficial both for the bank, which was able to quickly sell the asset, and for the buyer, who has the opportunity to receive additional profit.
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