Question

Give Reason Or Explain the following statements.
Overdraft facility is provided to current account holder.

Answer 1

Overdraft facility 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. These kind of facilities are mostly provided to current deposit holders because such accounts are opened for business transaction purposes and any kind of problem related to bank balance might cause a huge loss for the business. So in order to prevent such business uncertainties, this facility is availed by the current deposit holders.