"[2] Occasionally, banks may not have enough money in their Federal Reserve accounts to fulfill their withdrawals.
By the end of that particular day, Bank A has an obligation to pay back the Federal Reserve.
Sometimes banks are not able to repay the amount that they overdrew during the day since daylight overdraft is ultimately making transactions with funds that are not there at the time the settlement occurs.
In this scenario, collateral works as an insurance for the Federal Reserve in case that the borrower is not able to return the overdraft that occurred during the day.
With proper regulations and policies, the daylight overdraft system will allow the banks to operate more efficiently.