many of us is not familiar the term like dishonor of the cheque, so i mentioned here for the knowldge.
Dishonored cheque is a cheque which, when presented, is REFUSED payment by the bank because of insufficient fund or because it is not in order.
Bank overdraft is a facility that allows the current account holder to overdraw from his account up to an agreed sum.
Hence, we cannot assume that the bank account must always have a debit balance meaning there is still cash left in the bank. At times, because of the bank given this bank overdraft facility to the business, you can see the business have overdrawn its current bank account hence resulting in a CREDIT balance which is an overdrawn balance/overdraft facility given by the bank- the credit balance means that the business is owing to its lender which is the bank.
3 comments:
Qamar u introduced a really interesting term Over draft. But bank is always aware to givin this facilty. He dont gave this facility to all the customers , he gave this facilty to the well reputed business man who have thier businessess in heavy amounts.
Coz bank cnat take risk to given his money to a person from which he is not sure that he or she might not be able to return back money to the bank. So that is an important aspact to give O/D facility to the customers.
you right that bank give over draft facility to only that customers who are doing strong business with the bank.
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