A bank overdraft is a short-term credit arrangement provided by a bank. It allows the account holder to continue making payments even when the account balance reaches zero, up to an agreed-upon limit, effectively creating a temporary liability for the customer.

A debit balance on a bank statement indicates that the account holder has withdrawn more funds than were available, resulting in a bank overdraft. From the bank's perspective, the customer's account is a liability, so a credit balance represents money the bank owes the customer. When the balance turns into a debit, it signifies that the customer owes money to the bank, effectively functioning as a short-term loan or credit facility provided by the institution.

A bank account is an asset account for a business. A credit balance in an asset account indicates that the account has been overdrawn, meaning the business has withdrawn more money than it had deposited. This liability to the bank is referred to as a bank overdraft. It signifies that the business owes money to the financial institution.

In the context of a bank passbook, a debit balance indicates that the bank has reduced the customer's account balance, which signifies a bank overdraft. This occurs when the amount withdrawn exceeds the amount deposited, resulting in a negative balance from the customer's perspective.