What is Bank Overdraft

A Bank Overdraft is a Loan arrangement under which a bank extends credit up to a certain amount (called overdraft limit) against which a current account customer can write checks or make withdrawals. This is most common form of business borrowing, an overdraft is a type of revolving loan where deposits (credits) are available for re-borrowing, and interest is charged only on the daily overdraft (debit) balance. It is, however, also a demand loanand is secured by an asset or property. Security over an immovable property may be created in favour of the bank by deposit of title deeds with the bank (E.M- Equitable Mortgage) or by execution of registered deed of mortgage. An overdraft is approved only for a fixed period (usually one year) after which it is must be renegotiated.

Procedure Before granting Loans:

Before granting the loan the bank officials/Manager will inspect the security for the loans and they will ascertain the Value of the property.

The branch also obtain legal opinion from the Bank's Legal advisor, for scrutiny of the loan the legal advisor needs the Encumbrance certificate for the last 13 Years and latest tax receipt is also must.

The valuation of the property done by bank's approved Engineer.

Documents needed for the Overdraft:

• Application
• Demand promissory note
• List of title deeds (Memorandum of deposit of title deeds )
• Letter of intimation
• Acknowledgement of having deposited title deeds
• Stamped letter of continuity.
• Stamped partnership letter / Memorandum/articles of association (if applicable)
• Registration of charges in case of limited Companies



Apply for Bank Overdraft