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GLOSSARYTERMS AS A CREDIT DESK USES THEM

Banker's acceptance

What is a banker's acceptance in trade finance?

ONE OF 366 TERMS · FREE · NO SIGNUP

BY MICHAEL SHANG · SIXTEEN YEARS IN COMMERCIAL BANKING · UPDATED

// THE SHORT ANSWER

A banker's acceptance is a time draft, or bill of exchange, that a bank has accepted, so that the bank rather than the buyer is unconditionally bound to pay its face value on the maturity date. It usually arises under a usance letter of credit or an importer's acceptance facility: the exporter holding an accepted bill can wait for maturity or sell it at a discount for cash now. In Australia, bank-accepted bills were long a common way to fund commercial loans, and the short-term benchmark rates of Australia and New Zealand are still named after bank bills.

BASIS  Practitioner judgment from sixteen years in commercial banking, set out in How Bankers Think (Highbank Press, 2026). Every borrower on this site is a composite constructed for teaching, not a client. The market is mid-market commercial lending as practised in New Zealand and Australia; where a convention differs elsewhere, the page says so.

// WHAT IT IS NOT

A usance letter of credit is the bank's promise to pay later against documents; a banker's acceptance is the accepted bill that promise can produce, which can be held or discounted.

// WORKED IN

// NEXT TO IT

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