Maharashtra State BoardHSC Commerce 12th Board Exam
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Explain the following term/concept. Overdraft - Secretarial Practice

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Short Note

Explain the following term/concept.

Overdraft

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Solution

(a) An overdraft implies only to the existing current account holder. Therefore, it is a credit facility granted by a bank to current account holders. 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 amount of credit balance in his current account.
(b) Generally, a low rate of interest is charged by bank, and collateral securities usually accepted for an overdraft facility.

Concept: Sources of Borrowed Capital - Commercial Banks
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APPEARS IN

Balbharati Secretarial Practice 12th Standard HSC Maharashtra State Board
Chapter 2 Sources of Corporate Finance
Exercises | Q 2. 4. | Page 37
SCERT Maharashtra Question Bank 12th Standard HSC Secretarial Practice Maharashtra State Board 2022
Chapter 2 Sources of Corporate Finance
Explain the following terms/concepts | Q 3
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