Current account /cash credit/overdraft

Subject: Economy

Context:

RBI has put in place certain safeguards  amid rising concerns over borrowers using multiple operating accounts, both current as well as cash credit (CC)/overdraft (OD).

Concept:

• An overdraft is an extension of credit from a lending institutionthat is granted when an account reaches zero.
• The overdraft allows the account holder to continue withdrawing money even when the account has no funds in it or has insufficient funds to cover the amount of the withdrawal