trust receipt

(banking) A declaration by a client to a bank that ownership in goods released by the bank are retained by the bank, and that the client has received the goods in trust only.
Release of merchandise by a bank to a buyer in which the bank retains title to the merchandise. The buyer, who obtains the goods for manufacturing or sales purposes, is obligated to maintain the goods (or the proceeds from their sale) distinct from the remainder of his/her assets and to hold them ready for repossession by the bank.
Trust receipts are used under letters of credit or collections so that the buyer may receive the goods before paying the issuing bank or collecting bank. See documentary collection; letter of credit.

Was this article helpful?

Related Articles

Need Support?

Can't find the answer you're looking for?
Contact Support