| / English Dictionary |
COMPENSATING BALANCE
| Pronunciation (US): |  | (GB): | |
I. (noun)
Sense 1
Meaning:
A minimum credit balance that a bank may require a borrower to keep on deposit as a condition for granting a loan; a common requirement for establishing a line of credit at a bank
Example:
the compensating balance increases the effective interest rate to the bank since the net amount loaned is reduced but the interest paid is unchanged
Synonyms:
compensating balance; offsetting balance
Classified under:
Nouns denoting possession and transfer of possession
Hypernyms ("compensating balance" is a kind of...):
balance (the difference between the totals of the credit and debit sides of an account)
YOU MAY ALSO LIKE
