Source : WordNet®

compensating balance
     n : a minimum credit balance that a bank may require a borrower
         to keep on deposit as a condition for granting a loan; a
         common requirement for establishing a line of credit at a
         bank; "the compensating balance increases the effective
         interest rate to the bank since the net amount loaned is
         reduced but the interest paid is unchanged" [syn: {offsetting
         balance}]