An overdraft allows you to withdraw more money than what is available in your bank account, up to a pre-approved limit. It is commonly used by businesses and individuals to manage short-term liquidity needs.
| Purpose | Temporary cash needs and short-term liquidity management |
|---|---|
| Limit | Pre-approved limit based on creditworthiness and banking history |
| Tenure | Flexible, usually renewable annually |
| Interest Rate | Charged only on the overdrawn amount for the period it’s used |
| Security | Can be secured (against fixed deposits, property, etc.) or unsecured |
| Repayment | Repayable anytime within the agreed terms; interest calculated on outstanding amount |
| Processing Time | Typically 1 to 5 working days |