### Question
How is the "net obligation" defined?


### Answer
The term **net obligation** is defined in *12 U.S.C. § 4402* as follows -

> the amount by which the covered contractual payment obligations of a financial institution or member exceed the covered contractual payment entitlements of the institution or member after netting under a netting contract

#### Citation:
  - *12 U.S.C. § 4402*
  - Heading: **CHAPTER 45-PAYMENT SYSTEM RISK REDUCTION**

