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Overdraft
What is an overdraft?
Overdraft is a credit facility in which money can be withdrawn from a current or savings account even if the account balance is zero or below. It is an extension of the credit limit offered by banks. The sanctioned limit is said to be “overdrawn”.
An authorised overdraft limit is assigned depending on the customer’s relationship with the bank. You can withdraw up to that limit. Banks charge interest only on the utilised amount from the total sanctioned limit, and facilities are typically renewed every 12 months.
The interest rate varies by lender and depends on the required overdraft amount, the balance in your account, and your existing relationship with the bank.
How to apply for an overdraft
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1
Check
Check eligibility on call
We review your savings or current account, existing bank relationship and the overdraft limit you need.
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2
Submit
Share KYC and statements
Provide KYC, income proof and recent bank statements so the lender can assess a sanctioned limit.
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3
Verify
We start verification
The bank checks account conduct and repayment history. We coordinate until the facility is sanctioned and ready to use.
Features of overdraft
Already know you need flexible, usage-based credit?
Linked to your bank account
An overdraft can be availed by maintaining a savings or current account with a participating bank.
Interest only on usage
Interest is charged only on the utilised amount from the total sanctioned limit, not on the unused portion.
Short-term and renewable
Credit is usually repaid within 12 months or less and facilities are typically reviewed or renewed each year.
Limit based on your profile
The sanctioned limit depends on account value, repayment history and your relationship with the bank. Confirm current caps with the lender.