26 April 2012
If you open an account with a bank with some money and earn no interest since there are large number of transactions on any day, it is called a current account. If the bank is willing to allow you to draw some more money over your balance, it is called an overdraft account. Example. I deposited Rs 10,000 with PNB and the balance is Rs 10,000 at the end of today, April 25, 2012. It is a current account. For whatever reason, the bank, Punjab National Bank is willing to allow me to draw Rs15,000 from my above account. Then,the above current account has become an overdraft account. The bank may execute special loan documents or take whatever precautions to safeguard its interest.
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