FAQs on Overdraft Limit provided by Banks
Q. How is the overdraft limit calculated?
Ans. The financial health of an individual, enterprise or company determines the overdraft limit. There are various factors involved in calculating the overdraft limit, such as financial stability, account balance, age of account with bank, creditworthiness, relationship with bank, debts or defaults, if any and much more.
Q. What happens if you go over your overdraft limit?
Ans. Generally, a borrower is allowed to use cash, only uptil the sanctioned limit. He/she is not permitted to cross the overdraft limit.
Q. Who offers OD limit loans?
Ans. Almost every bank offers OD loan and some of the leading banks include SBI, HDFC Bank, ICICI bank, Axis Bank, Punjab National Bank, Tata Capital, etc.
Q. Can I withdraw overdraft money?
Ans. Certainly, overdraft itself is termed as a credit instrument, wherein borrowers have access to withdraw cash as per their requirements from the total sanctioned limit.
Q. Can I increase my overdraft limit?
Ans. Increase or decrease of overdraft limit totally depends on the sole discretion of the lender or bank. You can approach the lender and place the request for an increase in overdraft limit.
Q. What happens if I can’t pay my overdraft?
Ans. The bank may charge certain fees or may deduct the outstanding amount directly from your bank account.
Q. How much interest do you pay on an overdraft?
Ans. The interest rate offered on overdraft facility varies from bank to bank and depends on your profile and relationship with the bank in which you have your savings or current account.