What is bank over draft?

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Bank Over Draft


Bank is an institution which accepts our savings as deposit and gives loans when we needs funds. Bank grants different types of loans to it's clients when they need e.g. cash credit, over-draft and clean loans (advances). Over-draft is a facility which a bank grants to it's current account holder implying that account holder can deposit his saving with bank when he has surplus funds but when he is in need of funds more than his deposit, he can do so upto a certain limit, which is to be sanctioned by bank authorities, taking into account the financial resources of the borrower.

Interest on overdraft is charged by bank on the actual amount over drawn by the account holder. 

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