Repayable on demand
What does “repayable on demand” mean on an overdraft or business facility?
ONE OF 180 TERMS · FREE · NO SIGNUP
BY MICHAEL SHANG · SIXTEEN YEARS IN COMMERCIAL BANKING · UPDATED
// THE SHORT ANSWER
A facility repayable on demand — most overdrafts, and some facilities that look committed — can be called by the bank at any time, without a breach to point to. In practice banks rarely call a demand facility that is performing, and the annual review is where the decision to keep the money available is actually made. What the words change is the borrower's position on the bad day: a demand facility gives no promise to rely on, and a business funding a permanent need with one is borrowing its future from the bank's goodwill.
BASIS Practitioner judgment from sixteen years in commercial banking, set out in How Bankers Think (Highbank Press, 2026). Every borrower on this site is a composite constructed for teaching, not a client. The market is mid-market commercial lending as practised in New Zealand and Australia; where a convention differs elsewhere, the page says so.
// WORKED IN
// NEXT TO IT
// SUBSCRIBE
The Lab.
One case file and one question, in your inbox every Tuesday morning, New Zealand time. The senior banker's read opens only after you answer.
FREE WITH IT · THREE PDFS
An interview case, an annotated credit paper, and a one-page loan application sheet.
No spam. Unsubscribe anytime. Educational content only.