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Questions
Explain the term bank overdraft.
Write a short note on overdraft facility.
Answer in Brief
Solution
- Overdraft is an arrangement under which a current account holder is allowed to withdraw more than the balance to his credit, up to the specified limit.
- An overdraft is allowed for a short period, and interest is charged on it.
- Commercial banks provide overdraft facilities on the security of some assets or on the personal security of the account holder.
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Commercial Banks: Functions
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