Daylight Overdrafts

A daylight overdraft occurs at any point in the business day when the balance in an institution’s account becomes negative. To monitor an institution’s overdraft activity and its compliance with the PSR policy and to calculate daylight overdraft charges, the Federal Reserve has developed Account Balance Services (ABS) Ex-Post Services.

Daylight Credit Usage Reports

The Reserve Banks use ABS to generate various reports at the end of each day and at the end of each two-week reserve maintenance period. Daily reports are used by Reserve Bank PSR monitoring staff and institutions. The two-week reserve maintenance period reports capture information, such as peak daily overdrafts for the period, overdrafts in excess of net debit cap, book-entry overdrafts, non-Fedwire account activity, end-of-minute account balances for a particular day, and related ratios, such as the peak daily overdraft relative to net debit cap.

Account Balance Services (ABS) is a centralized application that monitors ex-post depository institutions' compliance with the Board of Governors' Payment System Risk (PSR) policy. The Board's PSR policy is intended to control the use of intraday credit, which is extended to account holders that incur negative balances in their Federal Reserve accounts.  Throughout the business day, numerous transactions are posted to an institutions' account in real-time, some with associated predetermined posting times, depending on the type of transaction. Once the transaction information is consolidated into end-of-minute balances, ABS determines daylight credit usage and calculates a daily charge, if applicable, based on each depository institution's average overdraft for a given day.