When a payor bank gets an item payable from a customer's account with insufficient funds, the bank may:

Question

Quizplus · Accepted Answer

When a payor bank receives an item for payment from a customer's account that has insufficient funds, it has the option to either dishonor the item and return it or pay the item and charge it to the customer's account, thereby creating an overdraft. The choice depends on the bank's policies and the arrangements with the customer.

When a Payor Bank Gets an Item Payable from a Customer's