Often we may notice two balance when we look at our ATM statement slip, mentioning both current balance or available balance. Have you ever thought what does it mean?
Or When you visit your bank to withdraw money which your friend had deposited by cheque and teller informs that, your balance is insufficient. You will be dumbstruck for a moment. So, it is better to know what happens when cheque is submitted or issued.
In banking terms, available balance refers to the actual amount available without any restriction. You are free to withdraw or swipe that amount.
Current balance is amount which is bigger or lesser than available balance. Current balance refers to the amount which you are yet to receive in your account or which are on hold.
It usually happens in case of cheque issue, as it consumes time. Clearing differs in different countries and so there are places where clearing may be over in a few hours and may take longer in clearing a check, especially if it is outstation check.
Current balance amount differs because even though bank knows that cheque is deposited or issued from your account but it will not allow you to use that amount unless cheque is cleared.
Say for example, If you have Rs 50,000 in your account and you issue cheque of Rs 25,000. The bank agrees and puts Rs 25,000 aside for the transaction, and now, though current balance in your account is still Rs 50,000, the available balance is Rs 50,000- Rs 25,000 = Rs 25,000.