BANK DRAFT Meaning and
Definition
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A bank draft refers to a financial instrument issued by a bank on behalf of a customer that enables the transfer of a specific sum of money from one party to another. It is a type of payment method, often used in international transactions or when the payer does not have access to electronic or online banking services.
A bank draft is considered a secure payment option as it guarantees the availability of funds and provides assurance to the receiver that the payment will be honored. To obtain a bank draft, the payer typically visits their bank branch and requests the issuance of a draft for a specified amount, payable to the designated recipient. The bank then debits the payer's account and issues the draft, which operates as a guarantee of payment.
One characteristic that distinguishes a bank draft from a regular personal check is that it is drawn on the bank's own funds rather than the payer's account. This feature provides an added level of security as the funds are immediately held by the bank. Bank drafts are often used for high-value transactions or for making payments in foreign currencies, especially when participants do not have established relationships or when trust between parties is a concern.
Bank drafts are a widely accepted form of payment, particularly in situations where credit cards or electronic transfers may not be viable options. They are commonly used for large purchases, such as real estate transactions or when making payments to unfamiliar individuals or entities.
Common Misspellings for BANK DRAFT
- vank draft
- nank draft
- hank draft
- gank draft
- bznk draft
- bsnk draft
- bwnk draft
- bqnk draft
- babk draft
- bamk draft
- bajk draft
- bahk draft
- banj draft
- banm draft
- banl draft
- bano draft
- bani draft
- bank sraft
- bank xraft
Etymology of BANK DRAFT
The etymology of the term "bank draft" can be traced back to several sources.
The word "bank" originated from the Italian word "banco" or "banca", which referred to a bench or table used by moneylenders. It later evolved to signify the place where financial transactions, including deposits and loans, were conducted.
The term "draft" comes from Old French "draught" or "draght", meaning a pulling or drawing action. In the context of banking, it implies a written order to pay a specified amount of money from one bank to another, drawn on a particular account.
Therefore, "bank draft" combines these meanings to signify a written payment instrument issued by a bank, authorizing the transfer of funds from one account to another.
Similar spelling words for BANK DRAFT
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