BANKING AFFAIRS

Detailed explanation-1: -An overdraft facility in a Current Account allows you to withdraw from even though the balance is zero.

Detailed explanation-2: -Overdraft-Under this arrangement, a customer holding a current account is allowed to withdraw more than the available balance in his account. He can overdraw up to a specific limit and for an agreed period.

Detailed explanation-3: -An overdraft facility allows you to withdraw funds from a fixed line of credit (sanctioned loan amount) as and when you need and deposit funds in the same. Thus, you can withdraw and repay as per your convenience.

Detailed explanation-4: -Current accounts are those accounts which are opened for the purpose of regular business transaction. This type of account is more suited for users like firms, companies, business organisation etc. Bank gives many facilities to current account holder, one such facility is overdraft facility.

Detailed explanation-5: -There are two basic types of overdrafts – secured and unsecured. While the former requires assurance in the form of collateral, the latter only needs the borrower to hold an account with the lending bank. The banks charge a processing fee initially and then impose interest on the sum overdrawn or the borrowed amount.