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Know About Overdraft

Welcome to our Article! Today, we're going to talk about something super useful for your business - the Overdraft Facility. Don't worry, we're keeping it simple and easy to understand.

CRDTLIN Capital gives you the power to take an OD Loan. It's a bit like asking for a little financial boost when you need it the most. Even if your Savings or Current Account is looking a bit slim, CRDTLIN Capital has got your back. They let you borrow money, making sure your business sails smoothly, no matter the waves of expenses that come your way.

How to Apply for Overdraft?


Approved Credit Limit

You get an overdraft up to a certain limit, and this limit can vary for different borrowers.

Interest Rate

You are charged interest on the amount you use from the overdraft. The interest is calculated daily and added to the total at the end of the month. If you don’t pay according to the schedule, the interest is added to the principal amount, and new interest is calculated on the updated total.

Nil Prepayment Charges

Unlike regular loans, there are no charges if you want to repay the overdraft early. You also don’t need to pay back in fixed monthly installments (EMIs). Repay the borrowed amount whenever you can.

Repayment not in EMIs

You can repay the overdraft whenever you have the funds. No need to follow a fixed EMI schedule. However, if the lender asks for repayment, you need to comply.

Minimum Monthly Payment

While there’s no fixed monthly payment, make sure you keep your repayments within the overdraft limit. Delayed repayments can impact your credit score.

Joint Borrowers Allowed

If you take an overdraft with someone else, both of you are responsible for repaying the entire amount. If one borrower can’t pay, the other has to cover the full debt. Collateral from both borrowers is at risk in case of default.


Your account may not automatically go into overdraft when you write a cheque. Instead, your cheque might bounce, and a dishonor charge could be applied to your account.

How does Overdraft (OD) work?

If your bank approves an overdraft for your account, it's like getting a loan from the bank. If you're already pre-approved for overdraft, whenever you need money, you can take it out even if your account has no balance. This is called going into overdraft. You can take out money up to a certain limit agreed upon with the bank. When you put money back into your account, the overdraft amount decreases.

While you have the overdraft, the bank charges you interest from the time you borrowed until you pay it back. You can repay the money to the bank whenever you want. After repaying, if you need more money, you can again go into overdraft until you reach the limit. When you use overdraft, the bank doesn't ask for any security.

However, if you use your assets, like your house, insurance policies, fixed deposits, shares, or bonds, as collateral, it becomes a secured overdraft. The interest rates and overdraft limits depend on the collateral. Interest is calculated daily because there's no fixed schedule for repaying the overdraft. You can repay the borrowed amount anytime without informing the bank.

Putting money into your account reduces your outstanding balance and the overdraft amount. So, the interest on the borrowed amount is calculated daily since it can change every day. Overdraft is a short-term credit facility, and it's good for managing temporary financial needs. Use it when necessary and repay quickly to avoid accumulating too much interest.


Types of Overdraft Facility

An overdraft is like a loan where the bank lets you withdraw more money than you have in your account. There are different types of overdrafts based on what you use as security.

Overdraft against Property

If you own a house, you can use it as security for an overdraft. The bank will check the value of your house before approving the overdraft. They might give you up to 40-50% of your property's value as an overdraft. Your credit history and ability to repay are also considered

Overdraft against Fixed Deposits

If you have money in Fixed Deposits (FDs), you can use them as collateral for an overdraft. It's easier and faster compared to using your house. You might get up to 75% of the FD amount as an overdraft. The interest rate is usually lower, around 2% more than what you earn from the FD.

Overdraft against Insurance Policy

You can use your insurance policy as collateral for an overdraft. The amount you get depends on the surrender value of your policy. You might get more money compared to using FDs as collateral.

Overdraft against Equity

Though not preferred, you can use your shares (equity) as collateral for an overdraft. The amount you get is less because the value of shares can change in the market.

Overdraft against Salary

If you have a salary account with a bank, you can get an overdraft against your salary. The limit might be 2-3 times your salary, depending on the bank. This is like a short-term loan, and the bank looks at your salary details to decide the limit.


Conclusion of Overdraft Facility

In conclusion, the Overdraft facility offered by CRDTLIN Capital proves to be a valuable financial tool for individuals and businesses alike. With its flexible credit line, borrowers can effectively manage cash flow, seize opportunities, and navigate unexpected expenses.

The seamless application process and competitive terms make our Overdraft facility a reliable choice for those seeking financial flexibility and stability. Whether for short-term liquidity needs or strategic financial planning, this facility demonstrates CRDTLIN Capital's commitment to providing accessible and efficient financial solutions for its clients.


You Can Find All Answers Here

Almost every public or private sector bank in India provides an overdraft facility. However, the specific loan terms like minimum and maximum amount, interest rate, and repayment period vary between banks. These terms depend on the customer's financial background, repayment capacity, and overall profile.
Yes, you can withdraw money from an overdraft facility. It is a credit arrangement that allows borrowers to use funds in portions from the total sanctioned limit.
If you are unable to pay the outstanding overdraft amount, the bank has the right to deduct the balance from your existing savings or current account.
The duration a bank account can be overdrawn is set by the bank and varies based on the customer's relationship with the bank.
A bank overdraft is similar to a bank account with a negative balance, up to the sanctioned overdraft limit. For example, if you have Rs. 10 lakh in your account and withdraw Rs. 12 lakh, the extra Rs. 2 lakh becomes an overdraft loan. The bank will charge interest on this additional borrowed amount.
Overdraft facilities can be offered by various financial institutions. Leading banks in India, including SBI, HDFC Bank, Axis Bank, ICICI Bank, Punjab National Bank, etc., provide overdraft facilities to their customers.