PRC-3 · Chapter 4 · Question 30 of 65
A small business sets up an arrangement with its bank allowing it to withdraw up to Rs. 500,000 more than it actually has in its current account, paying daily interest on the overdrawn amount. What is this financing called?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: B) Bank overdraft
Explanation
A bank overdraft is a flexible short-term borrowing facility where a bank allows a business to withdraw funds beyond its account balance up to an agreed limit.
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