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Bank Overdraft Loan-Unlock Unlimited Funds with Our Bank Overdraft Loan +9015552537-Apply Now and Secure Your Financial Freedom in India!

A bank overdraft facility in India allows customers to withdraw funds beyond their available balance up to a pre-approved limit, acting as a revolving line of credit with interest charged only on the utilized amount

Draftline accounts (also called dropline overdraft) extend this flexibility by enabling unlimited draw-and-repay cycles within the sanctioned limit, differing from a standard current account by focusing on on-demand credit rather than transaction processing Overdrafts can be secured (against collateral like fixed deposits, property, or insurance) or unsecured (based purely on creditworthiness), with secured overdraft loans typically offering lower interest rates and higher limits than unsecured overdraft loan India products

In 2025, OD loan interest rate 2025 for secured overdraft ranges from roughly 8–11% p.a., while unsecured overdraft loan India rates can be 12–18% p.a., varying by bank and customer profile . Major institutions such as HDFC Bank, ICICI Bank, Axis Bank, SBI, and Kotak Mahindra Bank lead the market with Draftline overdraft HDFC / ICICI / Axis Bank offerings tailored for salaried individuals, MSME overdraft loan schemes, and startup credit lines.

Understanding how to get OD facility in India, from eligibility and documents required through online application, is key to optimizing working capital overdraft, emergency fund overdraft, and personal overdraft facility 2025 needs without falling prey to penalties or excessive fees  .

What is a Bank Overdraft Facility?

A bank overdraft facility allows you to withdraw more money from your account than what is available, up to a pre-sanctioned limit. In simple words, it acts like a short-term loan provided by your bank when your account balance goes negative.

This facility is helpful during cash crunch situations and can be linked to savings accounts, current accounts, or even salary accounts.

The overdraft limit is usually based on your income, credit history, relationship with the bank, and collateral (if applicable).

Draftline Account Meaning India

A Draftline account is a special type of banking facility where a customer is sanctioned an overdraft limit. You can borrow and repay flexibly within this limit. It’s almost like a revolving line of credit and is different from a traditional term loan.

Draftline account vs current account: A Draftline offers borrowing flexibility; a Current Account is primarily meant for regular transactions without an overdraft.

1. Understanding the Bank Overdraft Facility

A bank overdraft facility is a credit line linked to your savings or current account, enabling withdrawals beyond your available balance up to a sanctioned limit . Interest is levied only on the amount drawn, calculated daily on the outstanding balance, making it cost-effective for intermittent cash needs . Overdraft facility for salaried individuals India is often pre-approved based on salary history, letting customers access funds via cheques or net banking when their balance reaches zero. Unlike term loans, there is no fixed EMI; repayments can be made in full or part at any time, and funds become available again up to the limit .

Secured Overdraft Loan: Overview

A secured overdraft loan requires you to pledge collateral such as:

  • Fixed Deposit (FD)
  • Property
  • Insurance Policies
  • Shares or Bonds

Since the risk for the bank is lower, you enjoy lower OD loan interest rates and higher limits.

Common examples:-

  • OD against property India
  • OD against fixed deposit

Benefits of secured overdraft facility:

  • Lower interest rates
  • Higher borrowing limits
  • Flexible repayment options

Unsecured Overdraft Loan: Overview

An unsecured overdraft loan does not require any collateral. Banks approve it based on your creditworthiness, salary, and business turnover.

Commonly targeted users:

  • Salaried individuals
  • Small business owners
  • MSMEs
  • Startups

Examples:

  • Personal overdraft facility 2025
  • Instant OD loan online

Benefits of unsecured overdraft facility:

  • No asset pledge required
  • Fast processing
  • Ideal for emergencies

However, unsecured OD loans usually have higher interest rates than secured ones.

How to Apply for Overdraft Facility in India

Wondering how to get OD facility in India? Here’s a simple step-by-step guide:

  1. Choose the right bank: Compare the best banks for overdraft loans.
  2. Select type: Decide between secured vs unsecured overdraft based on your need.
  3. Gather documents: (PAN, Aadhaar, income proof, property documents if secured).
  4. Submit application: You can apply overdraft loan online or visit the branch.
  5. Bank verification: Bank checks your eligibility.
  6. Approval and disbursement: Your overdraft limit is activated.

Documents required for overdraft loan:

  • PAN Card
  • Aadhaar Card
  • Salary Slips/ITR
  • Bank Statements
  • Collateral papers (if secured)

Overdraft Loan Eligibility Criteria India

General eligibility for availing an OD facility:

  • Indian citizen, 21 years and above
  • Good credit history (CIBIL score 700+)
  • Stable source of income (for individuals)
  • Business vintage (for MSMEs and startups)

Specific banks have different criteria. For example, MSME overdraft loan might require a minimum 2 years of business existence.

OD Loan Interest Rate 2025: What to Expect?

Interest on OD loans is only charged on the utilized amount, not the total sanctioned limit.

  • Secured OD loan interest rate: 8% – 11% p.a.
  • Unsecured OD loan interest rate: 12% – 18% p.a.

Note: Rates vary based on customer profile and bank policies.

Also, watch out for:

  • Processing fees
  • Renewal charges
  • Penalty on overdraft account India (in case of exceeding limits)

Working Capital Overdraft: A Lifeline for Businesses

Small businesses often face seasonal cash flow issues. A working capital overdraft acts as a buffer, ensuring operations continue smoothly even when receivables are delayed.

Top sectors using OD:

  • Retail businesses
  • Manufacturing units
  • Service industries

OD Loan for Small Business Owners & Startups in India

Both OD loan for small business owners and OD loan for startups in India are tailored products offered by banks to help entrepreneurs manage operational costs.

Why startups love OD loans:

  • No lump-sum EMIs (you pay only on usage)
  • No need to liquidate assets
  • Quick online approvals

1.1 Draftline Account Meaning India

A Draftline account meaning India refers to a dropline overdraft facility where the sanctioned limit is fixed but the outstanding balance reduces with repayments, allowing a “dropline” of credit rather than a fixed line. Draftline account vs current account comparison shows that while current accounts focus on transaction volume, Draftline prioritizes credit availability for emergencies and working capital.

2. Secured Overdraft Draftline

Secured overdraft loan requires collateral—such as Fixed Deposits, property, or insurance policies—reducing lender risk and enabling higher limits and lower interest rates. Overdraft against fixed deposit allows up to 90% of the FD value as an OD for tenures up to 18 months, with nil processing fees and auto-renewal options. OD against property India offers limits from ₹5 lakh to ₹5 crore on residential or commercial assets at attractive MCLR-linked rates and flexible tenures.

2.1 Benefits of Secured Overdraft Facility

  • Lower OD loan interest rate: Secured draftline can start as low as 8% p.a. for FD-backed and 10.75% p.a. for property-backed facilities.
  • Higher borrowing limits: Collateral enables lending up to ₹10 crore for corporate FD OD or ₹5 crore against property .
  • Flexible repayment and renewal: Auto-renewal on FD maturity and annual reviews for property OD with nominal renewal charges.

3. Unsecured Overdraft Draftline

Unsecured overdraft loan India requires no collateral and is sanctioned on the basis of salary, turnover, and credit score, making it ideal for individuals and small enterprises with CIBIL scores above 700. OD loan without collateral can be a personal overdraft facility 2025 for salaried people, typically at 12–18% p.a., with quick online approvals and minimal documentation .

3.1 Personal Overdraft Facility 2025 & Instant OD Loan Online

Banks like Axis Bank and HDFC offer instant OD loan online, enabling pre-approved salary account holders to draw funds in minutes via net banking or mobile. Personal overdraft facility 2025 features include zero collateral, flexible repayment, and doorstep service for application and sanction.

3.2 MSME Overdraft Loan & OD Loan for Startups in India

Under government-backed schemes like CGTMSE, MSME overdraft loan and OD loan for startups in India provide collateral-free working capital OD, requiring at least two years of operations and basic KYC, with interest subvention options for priority sector lending.

4. How to Apply for OD Facility in India

  1. Select the Right Bank: Compare best banks for overdraft loans—HDFC, ICICI, Axis, SBI, and Kotak—by interest rates and features.
  2. Choose Type: Decide between secured vs unsecured overdraft based on collateral availability.
  3. Gather Documents: PAN, Aadhaar, income proofs (salary slips/ITR), bank statements, and collateral papers if secured .
  4. Apply Online or Branch: Submit via net banking or visit the branch; How to apply for overdraft online guides are available on lenders’ websites .
  5. Verification & Sanction: Bank conducts credit and collateral valuation before activating the OD limit .

5. Eligibility Criteria & Documents Required

Typical OD loan eligibility criteria India include: Indian resident aged 21–60, stable income or business vintage, and CIBIL score ≥700.
Documents required for overdraft loan: identity proof (PAN, Aadhaar), address proof, income proof, bank statements, and collateral documents for secured OD.

6. Interest Calculation & OD Loan Interest Rate 2025

Interest on overdraft is calculated on a daily reducing balance: APR ÷ 365 × daily outstanding balance.
Projected OD loan interest rate 2025:

  • Secured OD: 8–11% p.a. for FD, 10.75–17% p.a. for property .
  • Unsecured OD: 12–18% p.a. based on profile and limits .

7. Overdraft vs Other Credit Products

7.1 Overdraft vs Personal Loan in India

Overdraft allows flexible, interest-only repayments on used funds, whereas personal loans disburse lump-sum with fixed EMIs .

7.2 Overdraft Loan vs Credit Card Loan

Overdraft interest rates are generally lower than credit card cash advance fees, and OD offers higher borrowing limits than credit cards for business needs.

7.3 Credit Line vs Overdraft

A credit line may involve scheduled repayments, while overdraft is purely on-demand against your account, ideal for unplanned expenses.

7.4 Overdraft vs Term Loan

Term loans suit one-time large investments with EMIs, while OD drafts balance ongoing working capital needs with pay-as-you-use interest.

8. Advantages & Cautions

Advantages: instant liquidity, pay-only-on-use, flexible repayment, no prepayment penalties .
Cautions: penal interest for over-limit or overdue, renewal charges, impact on credit score if misused.

9. Top Banks Offering Overdraft Loans

  • HDFC Bank Draftline Overdraft: ₹5,00,000–₹75 lakh at 15–18% p.a., digital renewal.
  • ICICI Bank Insta Secured Overdraft: Up to 90% FD value, 10.75–11% p.a., auto-renewal.
  • Axis Bank Overdraft Against Property: ₹5 lakh–₹5 crore, apply online at attractive rates.
  • SBI OD against FD: Up to 95% FD, 1% above FD rate.
  • Kotak Mahindra Bank Working Capital Overdraft: Tailored digital onboarding for MSMEs .

Top NBFC Offering Draftline Overdraft Loans:-

  • L AND T FINANCE LTD
  • TATA CAPITAL
  • GODRAJ FINANCE
  • BAJAJ FINANCE

Conclusion

A bank overdraft facility, whether secured or unsecured draftline, is an excellent financial tool for individuals and businesses alike. Understanding secured vs unsecured overdraft options, eligibility, benefits, and risks is crucial before you apply.

In 2025, with banks offering instant OD loan online, working capital overdraft, and even special overdraft for startups in India, you have plenty of options to choose from.

Whether you need a personal overdraft facility, OD against fixed deposit, or an MSME overdraft loan, planning wisely can turn your financial situation around.

Ready to manage your cash flow smarter? Apply overdraft loan online today and enjoy the benefits of overdraft facility tailored for your needs!

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