June 14th, 2014 by bemoneyaware
“Why would my ledger balance show the amount: Rs 14,495.While the available balance of 13,195 “, asked Shantanu as he forwarded me the ATM receipt shown in the image below (marked by red). When you check your bank balance, especially after ATM, you may see two different balances, the ledger balance and the available balance. This is because you have a pending transaction. Let’s look at the difference between the ledger balance and available balance.
The ledger balance is the balance available as of the beginning of the day or balance of your account after posting the previous night’s work.
The available balance is the ledger balance, plus or minus any subsequent activity during the day, such as debit card purchases, ATM transactions or withdrawals or direct deposits. So it is the balance at any point in time during the day.
So in the case of Shantanu,
- His balance at the beginning of the day was Rs 14,495. So his ledger balance was Rs 14,495.
- He withdrew Rs 1300.
- So now the balance available for him is Rs 14495 – 1300 = 13,195. This is the available balance .
- If there is no other activity during the day like ATM withdrawal or debit car purchase his balance at the end of the day i.e ledger balance would be Rs 13,195.
- If say he again does ATM withdrawal of Rs 1000 during the day then his ledger balance for that day would still be Rs 14,495 but
available balance after second withdrawal would become Rs 12,195.
Net balance at end of day taking account of all transactions would be ledger balance.
To understand how ledger and available balances work, let us consider another example of Aryan who has bank account with a ledger balance of Rs 20,000 .
- Of this amount, he has written a cheque for Rs 5,000 that is pending payment from his account as well as a debit card transaction of Rs 4,000.
- In such a case, he has an available balance of Rs 11,000 that he can withdraw, according to the terms of his account.
- Though his ledger balance reads Rs 20,000, he cannot withdraw the entire amount because 9000 of it is pending payment.
- Once the cheque and debit card payments are completely processed, his ledger balance, in such a case, will drop to Rs 11,000
So Available Balance is always less than Ledger Balance
No if money is deposited then your Available balance would be more than Ledger Balance. For example, cheques that you deposited yesterday and money was transferred during the day then Available balance will be more than the Ledger balance as shown in the image below where Shantanu had deposited a cheque of Rs 10,000 but did an ATM withdrawal of Rs 1,000.
- So Ledger balance was 27,312.
- His cheque got credited so available balance became Rs 37,312.
- Then he withdrew Rs 1000 so balance became Rs 36,312.