Advertisements
Advertisements
Question
Explain the following term/concept.
Overdraft
Explain
Solution
- A company having a current account with a bank is allowed an overdraft facility.
- Under an overdraft facility, the bank allows its customer to overdraw an amount up to a particular limit, i.e. to withdraw more than the credit balance amount in his current account.
- Repayments can be made whenever required during the time period.
- The interest is determined based on the actual amount withdrawn. Generally, the bank charges a low-interest rate, and collateral securities are usually accepted for an overdraft facility.
shaalaa.com
Sources of Borrowed Capital - Commercial Banks
Is there an error in this question or solution?
APPEARS IN
RELATED QUESTIONS
Write a word or a term or a phrase which can substitute the following statement.
The credit facility provided to a company having current account with bank.
State whether the following statement is true or false.
Cash credit is given against hypothecation of goods or any security
Find the odd one.
Answer in brief.
What are the schemes for disbursement of credit by bank?
