What is the difference between an eligible and an ineligible banker's acceptance, and what are the eligibility requirements?

What will be an ideal response?

In the United States, the Federal Reserve regulates the market for banker's acceptances. A distinction is drawn between eligible and ineligible banker's acceptances. If a bank sells an eligible banker's acceptance, it does not have to maintain reserves against the proceeds of the sale. On the other hand, if the bank sells an ineligible banker's acceptance, the bank must keep the proceeds of the sale on reserve with the Federal Reserve in a non-interest-bearing account. Clearly, if banks want to use the proceeds of the B/A for future lending, they must sell an eligible B/A.
The eligibility requirements for banker's acceptances are as follows:
1 . The tenor, or maturity, of the B/A must not be greater than 180 days, although it is possible to seek an exception.
2 . The acceptance must be created within 30 days of the date of shipment of the export goods.
3 . The transaction must be between two separate legal entities either within the United States, between a U.S. firm and a foreign firm, or between two foreign firms.
4 . The eligible B/A cannot be renewed at maturity unless a legitimate delay occurs in the transaction that is being financed.
5 . During the transaction, only one B/A is allowed to be outstanding, although the importer and the exporter can finance the transaction, just not for an overlapping interval of time.
6 . The B/A cannot be drawn without recourse to the second party in the transaction. In other words, if the bank that accepts the B/A defaults, the holder of the B/A must have recourse to the drawer of the B/A (that is, the party ultimately responsible for paying the bank).
7 . The B/A must not be used to finance trade with any country for which trade is prohibited by the U.S. Department of the Treasury.