Let's lean on rules since 2020 to guide any efforts. Savings mimic checking
accounts (my words, not the reg) in many ways on this issue. Since then,
savings in the US and multiple types of settlement outside it, need to
FULLY support negative balances.
Below is a breakdown of the rules and mechanics which seems to support use
cases.
Regulatory Framework for Negative Balances
While there is no federal law prohibiting a negative balance, the process
is ruled by how the transaction is classified and how fees are assessed.
-
*Regulation E (Electronic Fund Transfers):* For one-time debit card and
ATM transactions, banks cannot charge an overdraft fee unless the consumer
has explicitly *opted in*. However, even without an opt-in, a bank is
legally permitted to pay the transaction (creating a negative balance) as
long as it does *not* charge a fee.
-
CFPB Regulation E Summary
<https://www.consumerfinance.gov/rules-policy/regulations/1005/17/>
-
*The "Force-Post" Right:* Under the *Uniform Commercial Code (UCC) §
4-401*, a bank may charge a customer's account for any item that is
otherwise properly payable *even if the charge creates an overdraft.*
This is the legal "bedrock" for force-posting.
-
*APS N (Authorize Positive, Settle Negative):* Recent *FDIC and OCC
guidance* (2023) warns against "unfair" practices where a bank
authorizes a transaction when the balance is positive but charges a fee
when it settles negative due to intervening transactions.
Non-Discretionary Force-Posting
*Zero Balance Accounts (ZBAs)* and external funding failures
(Plaid/Mastercard Send) falls into the category where the bank often has no
choice but to accept a negative balance:
-
*Guaranteed Authorizations:* If a card network transaction was
previously authorized, the bank is contractually obligated to the network
to settle it. If the simultaneous funding (via Plaid/ACH/Other) fails
later, the bank must "force-post" the settlement, resulting in a negative
balance.
-
*Returned Deposits:* Per *Regulation CC*, if a deposited item is
returned unpaid (like an ACH return from an external account), the bank has
the right to "charge back" the account. If the current balance is zero,
this creates a negative balance as a *matter of accounting reality.*
My opinion of Community Effort Needed.
*The "force-post" function is essentially an accounting override that
allows a ledger to reflect a debt owed to the institution rather than a
credit held by the customer.* If this feature isn't in Fineract or its NOT
rock solid in performance that squares with rules, this is where the
community can work a solution back to the regs.
Implementing a global configuration for "force-posting" or allowing
negative balances without an explicit overdraft facility makes sense for
Fineract IMO, particularly for institutions operating in the US or those
handling real-time card networks.
Current Fineract environment appears to have savings accounts strictly
validated against a $0$ balance unless an Overdraft Facility is enabled.
However, your ZBA (Zero Balance Account) use case highlights a gap where a
negative balance is an *operational reality* (e.g., a funding failure)
rather than a *requested credit product*.
Value for Commercial Use in Fineract for the US.
-
*Ledger Integrity:*
-
*Operational Flexibility:*
-
*Market Compliance:* Supports US-specific behaviors like *APS N
(Authorize Positive, Settle Negative)* and *Regulation CC* chargebacks,
where the bank is legally required to post an item regardless of the
current balance.
-
*Would expect global configuration for the feature. *
*Paul Christison*
*Core Banking / Lending Compliance*
On Fri, Jan 9, 2026 at 9:06 AM Campbell Burgess <[email protected]>
wrote:
> Adam:
>
> Let me answer for Hitesh.
>
> There are essentially 3 use cases here in the United States whereby a
> customer savings account would go into overdraft.
>
> 1. The customer has received a prior approved overdraft limit. (I
> think this is the current supported use case)
> 2. The institution *has discretion* to decline, but makes the decision
> to pay.
> 1. Examples: Paying a check (or any) item manually presented, but
> not wanting to extend "formal" OD protection
> 3. The institution *does not have discretion* to decline
> 1. Examples:
> 1. A deposit returned unpaid (for any reason)
> 2. A network card transaction (where the bank previously
> authorized, guaranteed, the transaction)
> 3. Mistakes
>
> In our particular use case, we have a number of ZBAs (Zero Balance
> Accounts) that have external funding accounts attached.
>
> Transactions are presented on those accounts primarily from our own
> merchant terminals, but also from card networks like Mastercard, VISA and
> other debit networks.
>
> Using services like Plaid, we are making a simultaneous deposit to the
> account at the moment we approve the external transaction.
>
> We also make simultaneous deposits using services like Mastercard Send
> (similar to Venmo).
>
> External funding accounts typically have anywhere from .10% to .50%
> failure rate, for a myriad of reasons.
>
> That means that we have to force post that declined/returned/failed
> transaction back to the account (just like we have done in banking for 100
> years).
>
> (Of course, we then have other risk measures to recover the funds and
> return the account to at least -0-)
>
> Hitesh tells me that the "force-post" function is not presently available.
>
> If this feature is valuable to the community, we are happy to contribute
> it to the community.
>
> (we are really happy to contribute everything we do to the community...
> this would help us learn how to do that).
>
> Campbell
>
>
>
> On 1/7/2026 11:50 AM, Ádám Sághy wrote:
>
> Hi Hitesh,
>
> Can you elaborate on why should we support negative balance without overdraft
> facility?
>
> In my understanding negative balance of the savings account in fact means it
> goes into overdraft (if enabled) and rejected otherwise.
>
> Am I missing something here?
>
> Regards,
> Adam
>
> Sent from my iPhone
>
>
> On 7 Jan 2026, at 18:19, hitesh prajapati <[email protected]>
> <[email protected]> wrote:
>
>
> Hi All,
>
> Apache fineract doesn't allow withdrawal when account balance is 0 because of
> insufficient funds by design. And we can have the savings account to have a
> negative balance by enabling an overdraft facility for that savings product
> and savings account.
>
> We have a use case where we want to post withdrawal transactions to the
> savings account when the balance is zero and allow negative balance to the
> savings account without enabling overdraft facility for that account.
>
> Can we have global configuration in fineract that will allow the savings
> account with negative balance and by default we can have it OFF and when we
> make it ON, we should allow the savings account balance to go negative
> without enabling overdraft to it.
>
> Please advise, does this make sense to add this feature in finreact community
> version
>
> Thanks,
> Hitesh
>
> --
>
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>
>
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> Office: (806) 373-3921 | Direct: (806) 242-3704
>
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>
>
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> 2201 Civic Circle, Suite 1000
> Amarillo, TX 79109
>
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