In banking, a circular note is a document request by a
bank
A bank is a financial institution that accepts Deposit account, deposits from the public and creates a demand deposit while simultaneously making loans. Lending activities can be directly performed by the bank or indirectly through capital m ...
to its
foreign correspondents to pay a specified sum of money to a named person. The person in whose favour a circular note is issued is furnished with a letter (containing the signature of an official of the bank and the person named) called a letter of indication, which is usually referred to in the circular note, and must be produced on presentation of the note. Circular notes are generally issued against a payment of cash to the amount of the notes, but the notes need not necessarily be cashed, but may be returned to the banker in exchange for the amount for which they were originally issued.
It is the duty of the payer to see that payment is made to the proper person and that the signature is valid; he cannot recover the amount of a forged note from the banker who issued the note.
See also
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Cheque
A cheque (or check in American English) is a document that orders a bank, building society, or credit union, to pay a specific amount of money from a person's account to the person in whose name the cheque has been issued. The person writing ...
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Circular letter of credit
A circular letter of credit was a letter of credit issued by a bank or related financial institution to a private person, usually an individual of means, which enabled that person to draw funds from correspondent banks while traveling. This was con ...
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Letter of credit
A letter of credit (LC), also known as a documentary credit or bankers commercial credit, or letter of undertaking (LoU), is a payment mechanism used in international trade to provide an economic guarantee from a creditworthy bank to an exp ...
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Traveler's cheque
A traveller's cheque is a medium of exchange that can be used in place of the currency of a country. Each cheque is denominated in a preprinted fixed, round, amount of one of a number of major world currencies; it has two panels for a signat ...
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Hawala
Hawala or hewala ( , meaning ''transfer'' or sometimes ''trust''), originating in India as havala (), also known as in Persian, and or in Somali, is a popular and informal value transfer system based on the performance and honour of a hug ...
References
{{EB1911 article with no significant updates
Payment systems
Interest-bearing instruments