Exploring the Overdraft Facilities in Delhi

Overdraft facility is a handy and flexible financing option wherein the account holders can borrow up to a pre-defined limit. This means that the borrower can withdraw more than what he has in his account and the rate of interest will only be charged on the extra money withdrawn. The interest rate charged on the overdraft facility is fixed. For example: If you have Rs.10000 in your account and you withdraw Rs.13000, then interest will be charged on Rs. 3000 only.

A dropline overdraft loan is an excellent option for businesses who are undergoing a temporary shortage of funds but are sure of their ability to repay the loan quickly. It is better than opting for a business loan for meeting out short term funding needs.



Overdraft facility is offered by the banks and NBFCs to their existing customers. Few customers are pre-entitled for overdraft whereas others are required to take approval from the bank for availing it. To take approval from the bank, the borrower needs to request the lender either in writing or through their digital platform.

When the pre-entitled customers take out extra money from their account, their outstanding goes positive and the overdraft facility gets activated.

One can also secure their overdraft with collateral like equity, salary, insurance policy, home, fixed deposits etc.


  • No prepayment charges: Banks don’t levy any prepayment charges on overdrafts as they do on their loan products. Thus, one can procure an overdraft without worrying about additional costs and charges.
  • No EMI: Overdraft comes with the flexibility of repayment and the borrower is not bound by the monthly instalment cycles. One can repay the borrowed loan amount along with the levied interest for the period cumulatively.
  • Easy accessibility: Overdrafts are easy to access. Borrowers with a pre-approved limit can access overdrafts as and when they require the funds. They are an excellent way to counter the short term financial emergencies.
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  1. The credit limit as approved by the bank differs for the borrowers.
  2. The borrower has the flexibility in terms of repayment. They can pay the principal amount and interest cumulatively instead of EMIs. However, the borrower has to repay the borrowed amount as and when the lender asks for it.
  3. Repayment of an overdraft should be done quickly to avoid hampering your CIBIL score.
  4. One can apply for an overdraft with a co-applicant.
  5. The interest is charged on the borrowed amount and is calculated daily. The calculated interest amount gets added to the principal amount if the borrower doesn’t pay as per the schedule. Then the interest will be charged on the new principal amount.


The working of overdraft is simple. For pre-approved overdrafts, the borrower can withdraw the amount up to the approved limit directly from their bank account. The account will go into overdraft automatically and your outstanding will go positive. As the borrower repays the loan, the outstanding decreases. The lenders charge the interest on the amount borrowed for the time till the repayment is done. The loan borrowed can be paid either partially or fully. The rate of interest is charged on a daily basis. There is no pre-set monthly repayment schedule as in other loan products.  As the borrower repays the loan, they become eligible again for withdrawing the money from their account. For repaying the loan, the borrower can simply deposit the funds in their account from which they had withdrawn the money.

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Overdraft facility in Delhi is offered by several banks and NBFCs. It is an excellent and cheap financing option for small business owners who require small immediate funding for meeting their day to day expenses. However, one must try to be diligent in repayment of the borrowed amount. Different lenders offer different interest rate offerings and hence it is advisable to compare different lenders before opting for one. LoansJagat is an excellent platform which offers a transparent, convenient and comparative platform for the borrowers to compare different lenders on account of factors like loan amount, interest rate etc and choose the one which best meets their needs and requirements.

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