Overdraft facility is given only to current depositors.
Justify the following statement:
Overdraft facility is given only to current depositors.
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Overdraft is a credit facility allowed to current account holders:
- Under an overdraft facility, the bank allows, customers, to withdraw an amount, up to a particular limit.
- The collateral securities are usually accepted for an overdraft facility.
- The rate of interest charged by commercial banks for overdraft is low.
- Overdraft facility is given only to existing current depositors because they have good relations with the Bank.
- Thus, an overdraft facility is given only to current depositors.
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