Self liquidating (real bills doctrine) theory is a traditional and conservative banking theory. The main theme of this theory is that the earning asset of a bank should be limited to short-term self liquidating productive loans that include self liquidating commercial paper or short term loan intended to provide the current working capital, which in itself is of a self liquidating nature. The advantage of the ‘self-liquidating theory’ of commercial bank asset is mainly derived from the fact that such loans are considered to liquidate themselves automatically out of the sale of goods covered by such a transaction.
More from this Section
- House Air Waybill
House Air Waybill is transport document issued by an air freight consolidator.
- Avalisation of a Bill (Aval)
Avalisation of a Bill (Aval) is a bank’s guarantee to honour payment of a Bill of Exchange. An irrevocable, unconditional promise to pay on the due date.
- Tax treaties
Tax treaties normally define whether taxes are to be imposed on income earned in one country by the nationals of another, and if so, how. Tax treaties are ...
- All-equity discount rate
All-equity discount rate is a discount rate in capital budgeting that would be appropriate for discounting operating cash flows if the project were financed entirely with owners’ equity.
- Discount rate
Discount rate is the interest rate that the Federal Reserve changes banks on discount loans.
- Investment Banking
A specific division of banking related to the finance of capital for other companies, governments and other entities is known as investment banking.
Licensing is the granting of permission by one company to another company to use a specific form of its intellectual property under clearly defined conditions.