Bank Overdraft Facility is a short-term credit facility given to Savings Bank and Current Account holders, wherein they are allowed to withdraw the amount to the extent of pre-determined limit even when the balance in the account is zero.
Overdraft facility to savings bank and current account holders is given depending on the customer's profile, credit score, and repayment history. The regulation of RBI has stipulated a maximum overdraft of 50,000 to current account and cash credit account holders to take care of temporary cash-flow deficit. However, this does not apply to a personal overdraft facility. For businessmen who depend on the receivables, a temporary cash-flow deficit normally exists until the payment made for their services and products comes through.
There are three types of overdraft facilities:
Additional Info: Check HDFC Overdraft Facility.
5 Top Indian Banks that offer overdraft facilities are:
Features of HDFC Bank Smartdraft Overdraft Against Salary
Benefits of HDFC Smartdraft Overdraft Against Salary
Citibank Ready Credit Advantage is an instant cash facility to meet any unplanned expenses for the Citibank Suvidha Salary account holders.
Features of Citibank Ready Credit Advantage are:
Benefits of Citibank Ready Credit Advantage
With HSBC Smart Money Account, you can get a greater benefit for your Fixed Deposit Account while keeping the principal amount intact while earning the contracted rate of interest for the Fixed Deposit.
Features and Benefits of HSBC Smart Money Account
Corporate Salary Package (CSP) is a facility offered for employees of Corporate Companies, including service organisations like transport corporations, hotels, hospitals, etc. Overdraft facility is provided for the salary accounts under this package.
Features of SBI Overdraft Facility in CSP Account
Benefits of SBI Overdraft Facility in CSP Account
ICICI Bank Salary Overdraft is a facility extended by ICICI Bank to its customers maintaining a salary account with the bank.
Features of ICICI Bank Salary Overdraft
Benefits of ICICI Bank Salary Overdraft
The following are the benefits of ICICI Bank Salary Overdraft:
Additional Info: Check ICICI Insta OD facility.
The following are the differences between Bank Overdraft Facility and Personal Loan:
|Overdraft Facility||Personal Loan|
|Overdraft is a facility given to an individual or a Company in the savings bank account or current account. The amount withdrawn is not a fixed amount but will vary according to the requirement.||A Personal Loan is a fixed amount borrowed for a fixed period with monthly repayments.|
|A credit limit is set to the savings account or the current account and withdrawals can be made to the required extent up to the credit limit. This is similar to the Credit Card transactions wherein the utilisation is as per requirement, but should not go beyond the credit limit. Interest is charged on the amount that is withdrawn or utilised.||In a loan account, the interest will be charged on the entire sanctioned amount whether the amount is utilised or not.|
|Overdraft is for short duration and large amounts cannot be borrowed since credit limits are set and you cannot borrow beyond the limit that is fixed for the account.||In the case of a loan, larger amounts can be availed based on individual capacity. The repayment period is also longer. It will be in the range from 1 year to 5 years.|
|Repayment in the case of overdraft, is flexible and can be made in a lump sum. The facility can be closed at any point in time without any pre-closure charges.||Repayment for the loan accounts is for a fixed period and has to be done in EMIs month on month. Pre-closure of the loan account will attract pre-closure charges that vary from bank to bank.|
Now get Navi personal loan of Rs. 10,000 to Rs. 20 Lakhs at lowest interest rate starting from just 9.99% per annum. Repay in easy instalments of 3 to 72 months. The processing fee ranges from 2.5% to 6% of the sanctioned limit + GST.
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Ready Credit facility provided by Citibank is an overdraft facility that gives access to an amount over and above that is available in the Citibank Suvidha Salary Account. The amount can be utilised for any unplanned expenditure, for expenses incurred during festival seasons, for education, travel, etc.
If all the KYC documents have been provided for the Citibank Suvidha Salary Account, there is no requirement for any additional documents for Ready Credit Facility.
The quantum provided is 5 times the net salary credited to the Suvidha Account with a maximum of 5 Lakhs.
The Smartdraft facility of HDFC is available in Bangalore, Chennai, Hyderabad, Kolkata, Pune, Nasik, Gurgaon, Secunderabad, Jaipur, Indore, Bharuch, Baroda, Silvasa, Patiala, Surat, Trichur, Ludhiana, Coimbatore, Lucknow, Ahmedabad, Cochin, Chandigarh, Delhi, Cochin, and Noida.
Yes, the HSBC Smart Money Account can be opened even if the savings account and the fixed deposit are in two different branches.
An overdraft limit is a credit limit fixed for a savings bank or current account which can be utilised as per requirement. Interest has to be paid only to the extent of the amount utilised. The duration of the facility is short-term. The repayment is flexible and can also be made in a lump sum. The facility can be pre-closed without any charges.
A Personal Loan is a long-term credit facility which is released in a lump sum and is credited to the savings/current account. Interest has to be paid on the entire sanctioned amount whether the amount is utilised or not. The loan has to be repaid within a fixed period and in monthly EMIs. Pre-closure of the Personal Loan account will attract charges which vary from bank to bank.
An overdraft facility can be given against fixed deposit. A limit up to 90% of the fixed deposit will be provided and a lien will be marked on the fixed deposit. In the event of non-payment of the overdraft amount, the fixed deposit will be closed and the proceeds will be adjusted to the outstanding balance in the overdraft account.