occurred during the day. Thirdly, the Federal Reserve might require the daylight overdraft fee to reduce some risks associated with the overdraft during the day. The banks would not borrow more than the amount that they need in order to avoid a larger fee. Net debit cap Banks who are eligible for daylight overdrafts get a net debit cap. Different organizations hold different net debit caps because it is set by specific regulations and guidelines set up by the Federal Reserve. Along with the policies that the Federal Reserve can ask, net debit cap helps the Federal Reserve to reduce the risks that they might face with the daylight overdrafts. Conclusion Overall, the daylight overdraft is a system that is useful for the banks; however, it comes with costs for the Federal Reserve as a lender. With proper regulations and policies, the daylight overdraft system will allow the banks to operate more efficiently. References Banking