Dictionary of Banking Terms: bank draft
bank draft
check, drawn by a bank against its own funds deposited in another bank. Banks frequently use bank drafts when it is more convenient to write a bank check than to use a customer's check. For example, a bank's customer needing funds payable the next day in New York can instruct his bank to write a check drawn on its New York correspondent. Banks charge a fee for the service. In international banking, a sight draft or demand draft drawn on a foreign bank allows payment in a local currency at the spot exchange rate, minimizing foreign exchange risk in import/export trade financing. Contrast with cashier's check.
Dictionary of Business Terms: bank draft
bank draft
same as bill of exchange.
