Overdraft
The overdraft facility is a valuable financial tool offered to account holders, providing them with short-term credit flexibility. This facility allows customers to withdraw funds from their account even when the available balance is insufficient, up to a pre-approved limit.
Essentially, an overdraft serves as a temporary loan provided by the bank, allowing individuals and businesses to address urgent financial needs or bridge temporary cash flow gaps. Interest is charged only on the overdrawn amount and for the period it remains outstanding, making it a convenient and cost-effective solution for managing unexpected expenses or meeting short-term financial obligations.
The overdraft facility offers customers the convenience of immediate access to funds without the need for lengthy approval processes, enabling them to navigate financial challenges seamlessly and maintain financial stability.
Pre-approval: Customers need to apply for an overdraft facility and have their application approved by the Board. Once approved, they are granted a predetermined overdraft limit.
Interest Rates: Interest is charged on the amount overdrawn from the account. The interest rates are typically higher than those for standard loans or other forms of credit.
Credit Limit: The account has a maximum limit on the overdraft amount that customers can access. This limit is determined based on factors such as the customer’s credit history, income, and relationship with the bank.
Collateral: Depending on the overdraft amount and the customer’s creditworthiness, we may require collateral or security to mitigate the risk associated with the overdraft facility.
Repayment Terms: Overdrafts are usually short-term financing options, and the repayment terms vary according to our policy. The overdrawn amount is to be repaid within a specified period or before the expiration date.
Fees and Charges: We may levy fees and charges for setting up and maintaining the overdraft facility, as well as penalties for late payments or exceeding the overdraft limit.
Renewal: Overdraft facilities are typically renewable, subject to a review of the customer’s creditworthiness and financial situation.
Overall, the terms of overdraft facilities aim to provide customers with convenient access to short-term credit while ensuring responsible borrowing and risk management practices.
Overdraft Facility
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