When is a bill of exchange considered a bank draft?

A bill of exchange is considered a bank draft when it is issued by a bank or involves two banks.

Bank drafts are sometimes used in international trade to finance the purchase of goods between two companies. In this situation involving importers and exporters, are two related forms of sub-drafts including: sight drafts and time drafts.

Sight drafts allow exporters to hold ownership of the goods until they are paid by importers who have received the goods. Time drafts enable importers to pay the exporter at a future date following their receipt of the goods. The key difference lies in the period between the receipt of the goods and the payment for said goods.