Bank Overdraft Loan:
 Flexible Financial Support

No fixed EMIs
Interest only on use
Draw–repay–reuse

A Bank Overdraft (OD) is a revolving line on your savings/current account—great for emergencies, cash-flow gaps, or working capital. Limits are sanctioned on your profile or security. Use only what you need; pay interest only for the days used.

Where you can use it

  • Medical & emergency expenses
  • Wedding & event costs
  • Home renovation & appliances
  • Education, courses, upskilling
  • Travel or debt consolidation

Who it’s ideal for

  • Salaried income ≥ ₹20,000/month
  • Self-employed with 6–12m banking
  • Credit score 600+ (750+ best)
  • Need quick funds with lean paperwork
  • Prefer flexible underwriting

Get a Personal Loan upto ₹25 Lakh in in 30 Minutes*

100% digital and secure process, 45% lower EMIs starting @ ₹1104/Lakh, Pay interest only on what you use with flexi loan.

Instant e-KYC No collateral Flexible tenure Trusted partner
Approval 2 minutes & Disbursal in 30 Mins*
1+ Million

Happy Customers

Rs. 250+ crore

Monthly Personal Loans Disbursal

Wide Range of 60+

Partner Banks & NBFCs

Support team 500+

Team Size of Experts

⚡
Quick approvals: complete files can see same-day decisions.
💳
Unsecured: no collateral; credit profile drives pricing.
🧮
EMI clarity: compare total cost, fees, and prepayment rules before signing.

What is a Bank Overdraft Loan?

A Bank Overdraft Loan is a short-term credit facility that lets an account holder withdraw more money from their current or savings account than the available balance — up to a pre-approved limit set by the bank.

🔹 How it Works

Suppose your account balance is ₹0, and the bank gives you an overdraft limit of ₹1 lakh. You can withdraw or use up to ₹1 lakh even though your account technically has no funds. You pay interest only on the amount actually used, not on the full limit.

Example: If your overdraft limit is ₹1,00,000 and you withdraw ₹40,000, you’ll pay interest only on ₹40,000 until you repay it.

Benefits of Bank Overdraft Loan

Overdraft facilities are designed for agility and control:

✓

Flexible Access

Withdraw smaller or variable amounts whenever needed—no fresh loan each time.

⚡

Quick Support

Handle emergencies and short-term needs without long approvals.

↻

Cash-Flow Stability

Bridge timing gaps for personal or business spends; repay and reuse the limit.

₹

Pay Only on Use

Interest is charged on the utilized amount for the days it’s outstanding.

📝

Lean Documentation

Simplified paperwork and periodic reviews (policy varies by lender).

🛡️

Collateral Options

FD-backed or unsecured—eligibility and terms depend on bank/NBFC policy.

How Does It Work?

1
Apply

Your bank/NBFC evaluates income, credit, and account behavior.

2
Approval & Limit Set

A credit limit is sanctioned and reviewed periodically as per policy.

3
Use on Demand

Withdraw beyond balance anytime, up to your sanctioned limit.

4
Activate & Link

The OD is linked to your account and can be used just like normal funds through net banking, UPI, or cheque.

4
Repay & Reuse

Deposits auto-adjust OD; limit restores for future short-term needs.

Tip: OD shines for short-term, variable cash flows. For fixed, one-time needs, a term loan may be more cost-effective.

Eligibility Criteria

🎂

Age

21–60 years (some lenders allow up to 65 at loan maturity).

💰

Income

Minimum ₹20,000/month for salaried employees.

🏢

Job Stability

Minimum 1 year in current job; 2–3 years experience preferred.

📊

Credit Score

600+ eligible; 700–750 improves approval and reduces interest rate.

📍

Residency

Indian citizen living in India with stable address history.

Eligibility varies by NBFC policy, city, and risk profile.

Documents Required

🪪

Basic KYC (Common)

  • Identity: PAN (mandatory) + Aadhaar / Passport / DL / Voter ID
  • Address: Aadhaar / Passport / utility bill / rent agreement
  • Contact: Recent photo, active mobile & email
  • Banking: Cancelled cheque / passbook for e-mandate
💼

Salaried Employees

  • Last 3 salary slips
  • Salary account statement (6 months)
  • Employment ID / HR letter (if asked)
  • Form 16 / ITR (if required)
📊

Self-Employed / CA

  • Business Proof: GST / Udyam / Shop & Est. / CA Membership
  • ITR (2–3 yrs) + P&L + Balance Sheet
  • Current/Business account statement (6–12 months)
  • Office address proof
🩺

Doctors

  • MCI/State Registration Certificate
  • Clinic registration / hospital empanelment
  • ITR / Form 16 (if salaried doctor)
  • Bank statement (6–12 months)
🛡️

Armed Forces

  • Service/Force ID
  • Posting/Transfer letter (if asked)
  • Latest payslips
  • Salary account statement
➕

Optional (If Needed)

  • Co-applicant documents
  • Existing loan statements
  • NOC / verification documents
  • DPD/settlement proof if asked

Documentation varies by NBFC, city, loan amount & risk profile. Upload clear PDFs.

Bank Overdraft Loan — FAQ

Updated: 14 Nov 2025. These FAQs explain overdraft (OD) loans, how they work, and who should use them.

Q1. What is a Bank Overdraft Loan?
A Bank Overdraft (OD) is a revolving credit line linked to your bank account. It allows you to withdraw more than your available balance, up to a pre-approved limit, to meet short-term cash flow needs.
Q2. Do I pay interest on the full sanctioned limit?
No. You pay interest only on the amount actually used and for the number of days it remains utilized. For example, if your OD limit is ₹1,00,000 and you use ₹20,000 for 20 days, you pay interest only on ₹20,000 for 20 days.
Q3. Is collateral or security required for an overdraft?
Some banks/NBFCs offer unsecured overdrafts for salaried or prime customers, while others may require security such as fixed deposits, insurance policies, or property. It depends on the lender’s policy and your profile.
Q4. How is the overdraft limit decided?
The OD limit depends on factors like your monthly income, account history, credit score, existing EMIs, and the relationship value with your bank. Lenders may review and adjust the limit periodically based on utilization and repayment pattern.
Q5. Who should consider using an overdraft facility?
Ideal for individuals, professionals, or small businesses with variable income or irregular cash inflows. It suits those needing flexible access to funds without applying for a new loan each time.
Q6. What is the interest rate structure on overdraft loans?
Most banks charge between 11%–20% p.a. on utilized amounts, calculated on a daily reducing balance basis. Rates vary based on credit profile, type of overdraft (secured/unsecured), and bank relationship.
Q7. How is interest charged and repaid on an OD account?
Interest is usually debited monthly on the utilized amount. You can repay anytime to reduce interest outgo, and reuse funds within the approved limit multiple times.
Q8. What is the difference between an OD and a Personal Loan?
Overdraft: Flexible credit line, pay interest only on what you use, reusable limit. Personal Loan: Fixed disbursal with EMIs and interest on full amount from day one. OD is best for ongoing or unpredictable needs; PL suits one-time expenses.
Q9. Are there fees or charges on overdraft accounts?
Yes, typically — • Processing/setup fee (0.5%–2%) • Annual renewal charge • Interest on usage • Penal interest for limit breach • Documentation or stamp duty (where applicable)
Q10. Can I close or reduce my OD facility anytime?
Yes, you can close or reduce the overdraft limit anytime by repaying the outstanding and requesting closure with the bank. Some lenders may levy a small closure fee or require notice before termination.
Q11. Does using an OD affect my credit score?
Yes. Regular repayment and disciplined usage improve your credit score, while over-utilization or missed interest payments can lower it. Treat OD responsibly like any other credit facility.

Calculate Your EMI Instantly

A Multi-Purpose Loan EMI Calculator helps you estimate your monthly repayment amount before applying for a loan. Whether it’s for education, travel, wedding, home renovation, or business needs—know your EMI and plan smarter.

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