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Question
Distinguish between:
Cash credit and overdraft facility
Solution
| Bases | Cash credit | Overdraft facility |
| Definition | A loan taken in the form of cash by anyone from the bank against some securities is called cash credit. | Commercial banks allow their customers to withdraw an amount from the bank in excess of their balance. |
| Drawers | Anyone can take a cash loan from banks against some securities. | Only current account holders can avail this facility. |
| Interest rate charged | They charge higher rates of interest against a cash loan. | They charge minimal rates of interest against an overdraft. |
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