OFFSETTING BALANCE
(noun)Definitions
There is 1 meaning of the phrase
Offsetting Balance.
Offsetting Balance - as a noun
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 (Exact Relations)
compensating balanceExample Sentences
"The offsetting balance of the company's accounts payable is shown on the balance sheet."
"To maintain financial stability, the bank uses an offsetting balance against outstanding loans."
"The offsetting balance in the escrow account serves as security for the mortgage lender."
"The company used an offsetting balance to cover the unexpected expenses."
"The offsetting balance in the reserve fund ensures liquidity for emergencies."
