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What is a difference between cash credit and bank overdraft?
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What is a difference between cash credit and bank overdraft?
Overdraft:
It is a facility provided by the banks to their customers to withdraw more money from their accounts than that available in their accounts.
The overdraft facility is usually available to the current account customers and in exceptional cases to the savings account holders also.
The extra withdrawal is decided by banks or, the financial institutions and they may vary from bank to bank.
Interest is charged on the overdraft amount i.e. the extra amount that is withdrawn above the deposit.
These are repayable on demand i.e. the bank can call the customer to repay the amount at short notice.
Cheque book facility is available for the account holders.
Cash Credit:
It is a facility provided by banks or financial institutions for short-term lending that is required to any company or organisation to fulfil their credit need.
This credit amount is provided up to a predefined limit.
This facility is provided for the business purpose only if the customers have submitted the company assets, inventory, company papers etc. to the financial institution.
The limit of cash credit is generally supposed to be equal to the working capital requirement of the company.
The withdrawal limit is decided by the bank and varies from bank to bank.
Interest is charged on the extra withdrawal.
Cheque book facility is provided.
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What is a difference between cash credit and bank overdraft?
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What is a difference between cash credit and bank overdraft? for Class 11 2025 is part of Class 11 preparation. The Question and answers have been prepared according to the Class 11 exam syllabus. Information about What is a difference between cash credit and bank overdraft? covers all topics & solutions for Class 11 2025 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for What is a difference between cash credit and bank overdraft?.
What is a difference between cash credit and bank overdraft? for Class 11 2025 is part of Class 11 preparation. The Question and answers have been prepared according to the Class 11 exam syllabus. Information about What is a difference between cash credit and bank overdraft? covers all topics & solutions for Class 11 2025 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for What is a difference between cash credit and bank overdraft?.
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