compensating balance


Also found in: Dictionary, Financial.
Related to compensating balance: interest
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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 ?
The insured would then agree with its bank that the funds deposited by the insurance company would be applied toward reducing the insured's compensating balance requirement.
B.It Is The County s Intent To Maintain A Compensating Balance In The Concentration Account To Support Activity Costs For All Services, Except For Accounts That Are Required To Be Interest Bearing.
In order to compete for the liquid assets of businesses, banks set up complicated procedures to pay implicit interest on compensating balance accounts.
Small banks, unlike their larger counterparts, lack the systems to offer compensating balance schemes and sweep accounts that allow these banks to offer businesses credit for or interest on excess demand balances.
The Authority Intends To Use The Idle Funds As Compensating Balances To Pay For Service Charges For All Of Its Active Bank/checking Accounts.
"if the insurance transaction is timed with credit extension," he noted, "there is a strong probability that impressions will be made or perceptions will arise that they are dependent one on the other, that credit will not be granted unless insurance is purchased and compensating balances maintained.
Float from escrows and reserves provided compensating balances to support their corporate bank financing and warehouse lines.
A corn producer is concerned with the actual price of corn per bushel but is even more concerned that the total value of corn production be compensated by a risk management tool of like balance--the idea of compensating balances.
Traditional sources of commercial financing are not always accessible to small businesses, or may contain restrictive covenants like compensating balances or terms that are less than the economic life of the capital asset being purchased or constructed.
Clearing balances held at Reserve Banks are similar to compensating balances held at correspondent banks.
Logically, companies get a better return on their cash when they can consolidate it, rather than let it sit at various subsidiaries; if they do cash management through a bank, they can use higher compensating balances as leverage for better terms or more services.
These corporate financiers told the banks in ever-increasing numbers that they preferred to pay a fee rather than be required to maintain what to them amounted to unproductive compensating balances. As Koch (1995, p.
* 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?
Clearing balances held at Reserve Banks are similar to compensating balances held by respondent banks at correspondent banks.
Keep in mind that some banks may charge a different rate for service fees than for compensating balances. Inquire about your bank's policy in this regard.