English noun: compensating balance | |||
1. | compensating balance (possession) 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 | ||
Samples | 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 | offsetting balance | ||
Broader (hypernym) | balance | ||