JAIIB | ACCOUNTING AND FINANCIAL MANAGEMENT (AFM) | CASE STUDY ON OVERDRAFT BALANCE

The Junior Associate of the Indian Institute of Bankers (JAIIB) is a prestigious examination that entitles banking professionals with significant knowledge in banking operations and financial management. Among the topics covered in the Accounting and Financial Management (AFM) module, the concept of Overdraft Balance is crucial. Learning Sessions provides this article on the case study that delves into the key aspects of overdraft balances, their implications, and their importance for JAIIB candidates.

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An overdraft balance occurs when an account holder withdraws more money than is available in their account balance, creating a negative balance. This facility is extended by banks to provide liquidity support to customers for temporary financial needs. Overdrafts are commonly offered against savings accounts, current accounts, and credit facilities.

For the extensive preparation of candidates, get details through our YouTube videos for JAIIB AFM Module wise Syllabus with explanations and tips to help candidates in their preparation journey.

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Key Features of Overdraft Balance:

1. Short-term Credit Facility: An overdraft is typically for a short-term period to address immediate cash flow requirements.
2. Interest on Usage: Interest is charged only on the utilized amount for the period of usage.
3. Limit Based on Creditworthiness: The overdraft limit is pre-determined based on the borrower’s financial health and account performance.

Types of Overdrafts

• Secured Overdraft: Backed by collateral such as fixed deposits, securities, or property.
• Unsecured Overdraft: Granted without collateral but subject to stricter credit evaluations and higher interest rates.

In general it can be said that, The topic of overdraft balance in the JAIIB AFM module is a cornerstone for understanding short-term credit facilities and their role in banking operations. For JAIIB aspirants, mastering this concept is essential to excel in both the exam and real-world banking scenarios. By developing a comprehensive understanding of overdraft management, candidates can strengthen their expertise and become proficient in managing liquidity and credit for their institutions. Learning Sessions provides additional information about JAIIB AFM PRINCIPLES OF FINANCE by giving examples of real life scenarios.

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