BANKING AFFAIRS

Detailed explanation-1: -With an overdraft account, a bank is covering payments a customer has made that would otherwise be rejected, or in the case of actual physical checks, would bounce and be returned without payment. As with any loan, the borrower pays interest on the outstanding balance of an overdraft loan.

Detailed explanation-2: -The legal relationship between a customer and the bank is based on contract and is generally classified as a debtor-creditor relationship. This means that when a bank or other type of ADI accepts money from a customer it does so as a borrower on terms that may be implied.

Detailed explanation-3: -the customer is the debtor. The relationship in the first case, i.e. of a person depositing money with the bank reverses when he borrows money from the bank. Therefore, when it comes to loans and advances, it is the creditor-‐debtor relationship which prevails between the banker and the customer.

Detailed explanation-4: -A lease is a contractual arrangement where one party, called the lessor, provides an asset for use by the other party, referred to as the lessee, based on periodic payments for an agreed period. The lessee pays the lessor for the usage of the asset or property.