compensating balance (redirected from Compensating Balances)

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Noun

1.

compensating balance - 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; "the compensating balance increases the effective interest rate to the bank since the net amount loaned is reduced but the interest paid is unchanged" offsetting balance balance - the difference between the totals of the credit and debit sides of an account