A guideline used by commercial banks for corporate accounts. The rule stipulates that corporate customers must maintain an account deposit balance of at least 20% of the average borrowed balance on a line of credit. The actual required amount may vary depending upon prevailing interest rates and other factors.
Related information about twenty percent rule:
- Twenty Percent Rule Definition | Investopedia
The twenty percent rule stipulates that borrowers must keep deposits at the bank that are at least equal to 20% of their regular borrowings from their line of credit.
- Twenty-Percent Rule: Definition from Answers.com
Twenty-Percent Rule Commercial bank practice of requiring corporate borrowers to maintain average deposit balances equal to 20% of their borrowings under.
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