Full formBanking & Finance
DBBstands forDemand Bill Bought
Full Form of DBB
What is DBB?
Demand Bill Bought (DBB) is a financial instrument used in Indian banking and trade finance. It refers to a bill of exchange that is payable on demand, meaning the drawee must pay the amount immediately upon presentation. Banks in India purchase such bills from exporters or sellers, providing them with immediate liquidity by discounting the bill before its maturity. DBB is a key component of the Bill Purchase Facility, commonly used in domestic and international trade to facilitate smooth cash flow for businesses. The Reserve Bank of India regulates these transactions under the Negotiable Instruments Act, 1881. DBB is widely utilized in transactions involving letters of credit, export bills, and documentary collections. For banking aspirants preparing for exams like IBPS, SBI, and RBI Grade B, understanding DBB is crucial as it frequently appears in questions on trade finance, bill discounting, and working capital management. The process involves assessing the creditworthiness of the drawer and the drawee, ensuring compliance with KYC norms, and recording the transaction under the bank's advances portfolio. DBB helps in reducing the payment cycle for sellers, thus boosting trade and economic activity. In practice, banks apply a discount rate and deduct interest upfront, handing over the net proceeds to the seller. If the bill is dishonored, the bank can recourse to the seller. Overall, DBB plays a vital role in sustaining liquidity in the Indian trade ecosystem.
DBB का फुल फॉर्म
डिमांड बिल बॉट
Example
The exporter approached the bank to discount a DBB for the shipment of spices, receiving funds within hours.
DBB — frequently asked questions
What is the full form of DBB?
DBB stands for Demand Bill Bought, a type of bill of exchange that is payable on demand and purchased by banks to provide immediate liquidity to sellers.
How is DBB different from USB in Indian banking?
DBB (Demand Bill Bought) is payable on demand, while USB (Usance Bill Bought) has a future maturity date. Banks discount both but apply different interest calculation methods.
Is DBB commonly asked in banking exams like IBPS PO?
Yes, DBB is a frequent topic in banking exams, especially in questions related to trade finance, bill discounting, and working capital management. Candidates should know its definition and features.