Q.What do you mean by Overdraft?
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Start your 14-day free trial to unlock the full solution →Overdraft lets a current-account customer draw beyond the account balance up to a fixed limit, paying interest only on the excess amount drawn. A short TS Inter 2nd-year Commerce / NCERT-aligned banking term.
Overdraft
An overdraft is a lending facility granted by a commercial bank to its current-account holders. Under this facility, the customer is permitted to overdraw his account, that is, to withdraw more money than the actual balance lying in the account, up to a limit agreed with the bank. It is usually a short-term arrangement allowed against some security or on the goodwill of the customer. Interest is charged only on the amount actually overdrawn and for the period for which it remains overdrawn. The overdraft helps businesspersons and individuals tide over temporary shortages of funds. Thi …
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