Can withdraw OD money from the bank account
The overdraft is linked to the customer’s savings or current account so that the customer can withdraw the OD amount as per requirement and then deposit it. The overdraft remains outside the balance in the savings / current account, ie even if there is no money in the savings / current account of the customer, due to the overdraft, he can withdraw cash from his account up to the limit of the overdraft. What will be the overdraft limit depends on the customer’s requirement and the bank or NBFCs?
Repair of OD
Overdraft is not obligated to be repaid in EMI like a loan. The customer can repay it whenever he wants during the repair period. He can repay it in pieces, or outright. If desired, the overdraft can be repaired before the completion of the repair period without paying any charge. If money is available, after depositing the OD amount, it can be withdrawn again only if needed during the repair period. Interest can be saved from this. Interest is calculated on a daily basis.
Security has to be given
Customers can get an overdraft against things like FD, shares, property, salary, insurance policies, bonds etc. It is also called taking loans on FD or shares in easy language. Some banks also offer overdrafts on salary. This facility can also be taken in a joint. In such a situation, both will have the responsibility to pay the money. On the other hand, if one cannot repay the amount, then the other will have to pay the entire amount. There will be a risk on the things mortgaged.