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Give reason or explain the following statement:

Overdraft facility is provided to current account holders.

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Overdraft facility is provided to current account holders

Explanation: Overdraft facility is one of the primary functions of commercial banks. Overdraft facility is generally given to current account holders. Under this facility, commercial banks allow their customers to withdraw the amount from a bank in excess of their balance. The bank specifies the maximum limit of overdraft. Rate of interest is charged on the amount overdrawn.

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