Overdraft
Also called OD facility
A facility that lets you take out more money than your bank account holds, up to a set limit, as a short-term loan you repay with interest.
An overdraft is a safety net built into a bank account: you can go below zero, up to a limit, and pay interest on the gap. Jan Dhan accounts offer one of up to 10,000 rupees to eligible holders. It is useful for an emergency but costly if left unpaid, so clear it quickly. Read more in Jan Dhan account benefits.
Questions people ask
What is an overdraft?
An overdraft lets you withdraw more than your account balance, up to a limit the bank sets. The extra amount is a loan. You pay interest on what you use, for as long as you use it, until the account is back above zero.
What is the overdraft limit on a Jan Dhan account?
Up to 10,000 rupees for eligible Jan Dhan account holders, under the scheme as continued in 2018. No conditions are attached for an overdraft of up to 2,000 rupees, and the age limit for the facility is 18 to 65.
Is an overdraft the same as a personal loan?
No. A personal loan pays a fixed sum that you repay in EMIs. An overdraft is a limit on your account that you dip into when needed, paying interest only on the amount used.
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