OverDraft Limit

Overdraft is a limit facility mainly given by all leading banks? In which a bank open a overdraft account against security offered by customer and give this facility for operating the day by day business.The maximum overdraft limit is sanctioned by the bank depends upon the actual working capital gap and security pledged by the customer. Interest is charged on the basis of daily usages of the money from ovedraft account. The concerned bank can monitor the usages and limit of the facility.

Overdraft Facility is a financial instrument in which you can withdraw money from your savings or current account, even if your account balance is zero. This feature is provided by almost every financial institution, including banks and NBFCs. It’s a type of short-term loan to be repaid in defined tenure as required by the financial institutions. Lenders shall levy interest rate that the borrower needs to repay, as per the bank’s terms and conditions. The type of interest rate offered by lender is fixed and not floating.

ABOUT OverDraft Limit

The word overdraft means the act of overdrawing from a Bank account. In other words,the account holder withdraws more money from a Bank Account than has been deposited in it.Overdraft Limit is the excess withdrawal over the current account ammount. Every current account holder enjoys this facility, wherin they can borrow in excess of their funds in the account this limit is enhanced or reduced based on the customer's credit worthiness.Overdraft against Property is a flexible product offering that allows you a combination of a Term Loan and Overdraft facility against resi. or commercial property. It also allows you to fulfill your short term and long term business requirements, be it working capital requirement or business expansion by unlocking the potential of your property. This product is useful for professionals, Sole Proprietors, Proprietorship Firms, Partnership Firms or a Pvt. Limited Company with an annual turnover in therange of Rs. 90 lakh to INR 45 crore.

Features Of OverDraft Facility

  • Approved Credit Limit: Overdraft is awarded over a predetermined limit. This limit can be different for each borrower
  • Interest Rate: Interest rate is charged on the amount of overdraft used. It is calculated on daily basis and it is billed to the account at month-end. If you default on paying the overdraft as per set schedule, the interest amount will be added to the principal amount at month-end and then interest will be calculated on new principal
  • Nil prepayment charges: Whenever you want to prepay a loan, usually a prepayment charge is levied. However, this is not the case with the overdraft facility. When you repay the amount borrowed through overdraft you do not pay prepayment charges. Also you need not repay the Overdraft amount in EMIs. You can repay the borrowed amount cumulatively
  • Repayment is not done through EMIs: Repay the overdraft whenever you have the money. You do not have to repay the overdraft amount like you repay a loan. You do not have to repay in Equated Monthly Instalments (EMIs). You can repay whatever amount you like whenever you like. However, if the lender demands a repayment, then you will have to fulfil that demand
  • Minimum Monthly Payment: Overdraft has no minimum monthly repayment however the amount you owe should be in the overdraft limit. You should not delay overdraft repayment for long, as it affects your credit score
  • Joint borrowers are allowed on Overdraft: If you take an overdraft jointly then you and your joint applicant are both, in effect, responsible for the entire debt. Irrespective of the proportion of overdraft borrowed, both the applicants are responsible for the timely repayment of the overdraft. This means that if one of the borrowers is unable to pay/defaults, then the other borrower has to pay the entire amount. In such a case, irrespective of overdraft proportion of joint borrowers, all collaterals of each of the borrower are at stake if default occurs
  • Workings: Please note that your account may not automatically go into overdraft when you write a cheque. There are chances that your cheque is dishonoured instead of going into overdraft and then a dishonour charge may be levied on your account

Document List for Overdraft Limits

Home Loan is extended for the purpose of
1. Purchase of land and construction of a residential property
2. Purchase of New Flat / House
3. Purchase of old house / flat along with undivided share of land
4. Extension/modification of existing house / flat
5. Balance takeover from banks/HFC
6. Home Loans at the sole discretion of Banks/NBFCs/MNC Banks