If you also need money and the balance in the account is less, then you can take advantage of this facility of the bank. SBI gives a special facility to its customers, through which you can withdraw only the balance present in it from your bank account. Let’s know what is overdraft facility and you can take advantage of it…
New Delhi. State Bank of India (SBI) gives a special facility to its customers, through which you can withdraw only the balance present in it from your bank account. This facility of the bank is known as Overdraft Facility. Let’s know what is overdraft facility and you can take advantage of it…
What is overdraft facility?
Overdraft is a type of loan. Due to this, customers can withdraw more money from their bank account than the current balance. This extra money has to be repaid within a specified period and also attracts interest. Interest is calculated on daily basis. Overdraft facility can be given by any bank or non-banking financial company (NBFC). What will be the limit of overdraft you can get, it is decided by the banks or NBFCs.
You can apply like this
Banks offer preapproved overdraft facility to some of their customers. At the same time, some customers have to take separate approval for this. For this, you have to apply in writing or through internet banking. Some banks also charge a processing fee for this facility. There are two types of overdrafts, one secured, the other unsecured. Secured overdraft is one for which something is pledged as security.
You can get overdraft on things like FD, shares, house, salary, insurance policy, bonds etc. It is also called taking FD or loan against shares in simple language. By doing this, these things are in a way mortgaged with the bank or NBFCs. Even if you do not have anything to provide as security, you can still avail the overdraft facility. This is called unsecured overdraft. For example, credit card withdrawal.
Get this advantage
When you take a loan, there is a fixed tenure to repay it. If one repays the loan prematurely, he/she has to pay a prepayment charge but this is not the case with an overdraft. You can repay the money even before the stipulated period without paying any charges. Also, interest on this is to be paid only for the time for which the overdrafted amount remained with you. Apart from this, you are also not obliged to pay money in EMI. You can repay the money anytime within the stipulated period. Due to these things, it is cheaper and easier than taking a loan.
Keep this in mind
If you are not able to pay the overdraft, then it will be reimbursed by the things pledged by you. But if the overdrafted amount is more than the value of the things pledged, then you will have to pay the remaining amount.
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