Distinguish between
Cheque and Overdraft Facility.
Cheque and Overdraft Facility.
The difference
between cheque and overdraft facility is as follow:
1. A cheque refers to a document that orders a
bank to pay a specific amount of money from a person's account to the person in
whose name the cheque has been issued whereas Overdraft refers
to a continuous withdrawing facility in which the bank allows the customer to
withdraw amount more than what he holds to his credit, but only up to a certain
extent.
2. For availing a cheque facility, the person must have an
account with the bank whereas to avail overdraft facility, the borrower must
have a current account with the bank.
3. A cheque does not required any collateral assurance to the
bank whereas Overdraft facility is given against the security of fixed
assets.
4. A Cheque can be written up to the extent of credit balance
in the account whereas overdraft includes withdrawal of amounts beyond the
credit balance in the account.
The difference between cheque and overdraft facility is as follow:
1. A cheque refers to a document that orders a bank to pay a specific amount of money from a person's account to the person in whose name the cheque has been issued whereas Overdraft refers to a continuous withdrawing facility in which the bank allows the customer to withdraw amount more than what he holds to his credit, but only up to a certain extent.
2. For availing a cheque facility, the person must have an account with the bank whereas to avail overdraft facility, the borrower must have a current account with the bank.
3. A cheque does not required any collateral assurance to the bank whereas Overdraft facility is given against the security of fixed assets.
4. A Cheque can be written up to the extent of credit balance in the account whereas overdraft includes withdrawal of amounts beyond the credit balance in the account.
