overdraft loan
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  .
Table of Contents
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).
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.
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 .
A secured overdraft loan requires you to pledge collateral such as:
Since the risk for the bank is lower, you enjoy lower OD loan interest rates and higher limits.
Common examples:-
An unsecured overdraft loan does not require any collateral. Banks approve it based on your creditworthiness, salary, and business turnover.
Commonly targeted users:
However, unsecured OD loans usually have higher interest rates than secured ones.
Wondering how to get OD facility in India? Here’s a simple step-by-step guide:
General eligibility for availing an OD facility:
Specific banks have different criteria. For example, MSME overdraft loan might require a minimum 2 years of business existence.
Interest on OD loans is only charged on the utilized amount, not the total sanctioned limit.
Note: Rates vary based on customer profile and bank policies.
Also, watch out for:
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:
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:
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.
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.
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 .
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.
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.
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.
Interest on overdraft is calculated on a daily reducing balance: APR Ă· 365 Ă— daily outstanding balance.
Projected OD loan interest rate 2025:
Overdraft allows flexible, interest-only repayments on used funds, whereas personal loans disburse lump-sum with fixed EMIs .
Overdraft interest rates are generally lower than credit card cash advance fees, and OD offers higher borrowing limits than credit cards for business needs.
A credit line may involve scheduled repayments, while overdraft is purely on-demand against your account, ideal for unplanned expenses.
Term loans suit one-time large investments with EMIs, while OD drafts balance ongoing working capital needs with pay-as-you-use interest.
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.
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!
Navigating the world of personal loans can be daunting, especially when there are so many factors to consider before making… Read More
Gold loans remain a preferred financial instrument in India, and as we move into 2025, the landscape continues to evolve… Read More
In recent years, the Indian government has taken groundbreaking steps to empower micro, small, and medium enterprises (MSMEs) across the… Read More
In Indian loan market, The Indian financial sector is undergoing a significant transformation, and the loan market is at the… Read More
In recent years, digital lending in India has emerged as a game-changer, transforming the way individuals and businesses access credit.… Read More
India has long been striving to empower women, especially those in rural areas, by providing them with opportunities for economic… Read More
This website uses cookies.