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You Can Get More Amount Than The Balance In The Account By Using This Facility


New Delhi: The State Bank of India (SBI) is providing a special overdraft facility to their customers through which you can withdraw an amount more than your existing bank account balance.

Overdraft is a type of loan which allows customers to withdraw more money than they have in their bank account. This additional amount needs to be paid back to the bank within a certain period of time with interest charged on it on a daily basis. Overdraft facility can be offered by any bank or non-banking financial company (NBFC).

Your overdraft limit is determined by the respective Bank or NBFC giving you the overdraft.

How To Apply:

Banks do offer pre-approved overdraft facility to some of their customers. But, some customers need to get a separate approval for the same. You can apply for overdraft either through a written application or with help of internet banking.

However, you need to know that some banks also charge processing fees for this facility. Overdrafts are of two types, safe and unsafe. A safe overdraft is one where something is mortgaged in exchange for these funds.

You can get overdrafts on things like FDs, Shares, Home/Property, Salary, Insurance Policy, Bonds, etc. In simple words, it is like taking a loan on shares or FDs. By doing so, you are mortgaging the respective shares or FDs or any other property in exchange for this amount.

However, you can also avail an overdraft facility even if you do not have anything as security. This is called an Unsecured Overdraft. An example of this would be withdrawing money from a Credit Card.

Advantages Of Overdraft

Every customer is given a certain period of time to repay a loan every time you take one. In case one repays the loan earlier than expected, they have to pay a pre-payment charge, but this is not the case with overdrafts.

In case of overdrafts, you can pay off the amount earlier than the due date without having to pay any pre-payment charge. At the same time, Interest on the amount would be charged only for the amount of time you have used the overdraft facility. You are also not obliged to pay off the amount in fixed EMIs. A customer can pay off the overdraft amount anytime within the stipulated period. Its because of these advantages that using the Overdraft facility is cheaper and easier than taking a loan.

Things to keep in mind while using Overdraft facility

If you can’t pay off the overdraft, it would be compensated from what you have mortgaged. However, if the overdraft amount is more than the price of the mortgaged items, the balance will have to be paid by the customer.


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