BANKABLE PAPER Meaning and
Definition
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Bankable paper refers to a financial instrument, typically in the form of a document or evidence of a transaction, that is deemed acceptable and suitable for banks and other financial institutions to provide financial assistance, such as loans or credit facilities. It represents a financial instrument or document that possesses the necessary characteristics and credibility to be monetized or used as collateral in securing financial support from banks, lending institutions, or investors.
Bankable paper is commonly associated with negotiable instruments, such as promissory notes, bills of exchange, or letters of credit, that carry a high degree of reliability and creditworthiness. It refers to documents that meet the strict standards and requirements set by financial institutions, including the credibility of the issuing party, the underlying assets or transactions, and the enforceability and transferability of the document itself.
To be considered bankable, the paper must be freely transferable, meaning it can be easily bought, sold, or assigned to another party. It should also contain clear terms and conditions, including repayment obligations, interest rates, and maturity dates. Additionally, the underlying transaction or asset should have a reasonable level of certainty and stability to ensure that the financial institution can recover its investment in case of default or non-payment.
Overall, bankable paper refers to a document or financial instrument that possesses the necessary features and meets the standards required by financial institutions to provide financial support or credit facilities.
Etymology of BANKABLE PAPER
The term "bankable paper" is a combination of the words "bankable" and "paper".
The word "bankable" originated from the word "bank" and the suffix "-able". "Bank" comes from the Old Italian word "banca" or "bench", referring to the moneylender's table where financial transactions took place. Over time, it evolved into Middle French as "banque" and Middle English as "banke". It eventually took on the meaning of an institution that provides financial services, such as holding deposits, lending money, and facilitating monetary transactions.
The suffix "-able" is derived from Old French "-able", which indicates the ability or capability of something. When added to "bank", it creates the word "bankable", meaning something that is suitable for a bank or meets the criteria for acceptance by a bank.
