What is an overdraft?
Overdraft is a credit facility provided by banks. Customers who have a current account with a bank is allowed to withdraw more than the amount of balance in his account. Hence the available balance goes below zero. There is an agreed limit of overdraft that a customer can get from bank.
What is KYC ?
KYC or “Know your Customer” is a term used for customer identification process. If you hold an account in a bank, the bank may ask for submitting proofs so that you are in sync with the KYC regulations. It involves making efforts to determine identity and ownership of accounts, source of funds, the nature of customer’s business etc . This helps the banks to manage their risks too. The objective of the KYC is to prevent criminal elements using banks for money laundering.
KYC has two components - Identity and Address. Identity of a customer will remain the same, but the address may change. This is the reason why banks ask you to provide KYC details periodically.
