PRC-3 · Chapter 4 · Question 56 of 65
A small business has a cash flow problem and arranges with its bank to withdraw up to Rs. 300,000 more than is actually in its current account, paying daily interest only on the exact amount overdrawn. This facility is called a:
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: D) Bank overdraft
Explanation
An overdraft is a highly flexible short-term borrowing facility linked to a current account, allowing the holder to draw balance below zero up to a set limit.
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