compensating balance

(redirected from Compensating Balances)
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  • noun

Synonyms for compensating balance

a minimum credit balance that a bank may require a borrower to keep on deposit as a condition for granting a loan

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References in periodicals archive ?
Banks can optimize the value of these deposits, whereas mortgage bankers typically use them as compensating balances that reduce their cost of financing.
Provide a choice of receiving an invoice and paying directly for services or does it insist on payment through earned credit on compensating balances through account analysis?
The higher the earnings credit rate, the more the compensating balances are worth.
The difference in these pricing levels is fully reflected in our reported financial results for the year and creates compensating balances with our hog producers.
Those funds are used as compensating balances to reduce the rate of interest charged by the warehouse lender for the borrowed funds.
While the Company has agreed to register these escrowed shares, it cautions investors that these shares are being provided as collateral and compensating balances, and are not for immediate resale purposes.
These clearing balances are similar to the compensating balances offered by depository institutions to their business customers.
The fee can be avoided through easy-to-maintain compensating balances.
Early in the year, demand deposits surged as lower rates required businesses to build up compensating balances and as mortgage servicers held larger balances during the mortgage refinancing boom.
According to data from an annual survey by the Japan Fair Trade Commission, the reliance on these compensating balances for loans to small businesses declined steadily throughout the 1980s, from 45 percent of surveyed loan contracts in 1980 to 26 percent in 1990.