What exactly is Overdraft?
Overdraft is really a monetary tool in that the money can certainly still be withdrawn through the present or family savings, even though the balance goes below zero. It really is a form of expansion of financial limitation provided by banking institutions and therefore cash is reported to be ‘overdrawn’. A certified overdraft limitation is assigned for every consumer according to the bank to their relationship. The client can withdraw money up till the assigned restriction. Banking institutions do cost rate of interest from the money withdrawn in kind of overdraft.
Overdraft Account – Features
- Overdraft account is really a center which can be availed by keeping any banking account
- A few personal sector banking institutions are actually providing this facility for both wage and family savings holders
- The income expansion is provided in the foundation of customer’s account value, repayment history or credit rating
- It really is short-term credit given by the financial institution that should be compensated in the time limit that is stipulated
- Credit quantity or overdraft draws interest when it comes to time of usage which are often from a few days up to a couple of weeks
- Payment tenure is set because of the financial institution and possesses complete authority over the account and its own use
- Depending on the RBI laws, present accounts and money credit reports meet the criteria for at the most Rs. 50,000 each week