Discounting Bill of Exchange

 

There are a variety of facilities offered by the commercial bank. The overpayment center and the exchange discount are some of those properties. 

OVERDRAFT FACILITY 

An advance overdraft offered by allowing the current account holder to override their current account up to the agreed limit. It is an institution for a person who invests overspending the amount of balance in his account. The current account holders make arrangements with the banks that in the event of a check being issued by them without covering their bank deposit, then the bank should provide an overdraft and not cancel it. 

Overdraft security is usually financial assets such as stocks, liabilities (almost collateral), account holder insurance policies etc. 

• An overdraft is done without security in the current account. 
• In the case of a loan, the borrower has to pay interest on the entire loan amount but in the event of overspending, the borrower is given a lease only as he or she wishes. 
• The overdraft customer pays interest on the daily balance. 

DISCOUNTING BILLS OF EXCHANGE 

An exchange bill is a document that acknowledges the amount owed to take into account acquired assets. It is a paper signed by the debtor and the lender at a fixed amount to be paid by the due date. 

For example, suppose A buys goods from B, h may not pay B sooner rather than give B a transaction amount stating the amount owed and the time A will pay the debt. Now, B needs money right away, so he will introduce this bill in the bank for a reduction. The bank will deduct its commission and pay B the current amount of the bill. When the debt matures after the due date, the bank will receive a payment in A.