An overdraft facility allows account holders to withdraw funds exceeding their balance up to a sanctioned limit. It can be secured (backed by property, FD, or securities) or unsecured. Interest is charged only on the utilized amount for the period used.
OD differs from CC in being linked to a bank account rather than pledged stock. It is commonly used for managing temporary cash shortfalls, making urgent payments, or bridging receivable delays. Limits are reviewed annually.
Overdraft provides a flexible safety net for temporary cash shortfalls. Interest only on usage makes it cost-efficient for short-duration needs.
Nihal Fintech arranges overdraft facilities for businesses through lending partners, with both secured and unsecured options based on client needs.
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