Are you short of funds in your Current Account and need to compensate for your business requirements, but don’t know how to go about the same?
Let us find out how a Current Account with an overdraft facility can assist you.
It is a form of extension of a stipulated limit offered by banks; the said amount of funds is known as overdrawn. Depending on the relationship with the bank, an overdraft limit can be predefined as and when you contemplate an overdraft requirement.
This customized overdraft facility is unique and can prove to be beneficial during a sudden or unplanned financial situation. It is mainly for the purpose to carry out any business exigencies
You are permitted to withdraw the funds up till the specified limit. It is extended to the customer based on the Current Account value, repayment history, credit score, etc.
At times the bank considers this service as a short-term credit facility that needs to be settled on or before the predetermined due date.
The interest rate for the overdraft facility will only be charged on the utilized amount and the time of use which could range from either a couple of days or a few weeks.
The bank decides the repayment structure and tenure, and it has full authority and control over the overdraft facility and its usage. The repayment of the overdraft facility for the Current Account is not obligatory through an EMI – Equated Monthly Instalments. You can repay the amount as per your convenience of funds availability. However, if the bank demands a partial or full repayment due to unforeseen circumstances, then you have to meet that demand.
A current account with an overdraft facility is significantly an advantageous service offered by the banks. It aids the business owner in terms of cash flow to meet their daily working capital expenses. With the overdraft facility available through their Current Account, the account holder can settle the pending payments via cheques or pay-order in a trouble-free manner. This avoids a cheque dishonor and preserves the reputation of the business owner.
Every suitable service comes at a price, banks like Bank charge a certain annual fee for the overdraft facility for Current Accounts and other services that are part of it.
As per RBI guidelines, the overdraft limit provided by the banks to the account holders every week has increased from INR 50,000 to INR 1,00,000. It is not only for Current Accounts but also extended to cash credit and overdraft accounts.
Additionally, the RBI has maintained clean overdrafts for a small amount which are permitted at the discretion of the branch manager to the customers whose past dealings have been satisfactory. Banks may provide tailor-made schemes or services for every individual customer in this regard who maintains a Current Account with them.
How To Eligible Overdraft In New Business Customer
many banks or capital fund companies give overdraft accounts to new small businesses or old businesses to buy stock different companies or banks follow different policy rules any company or small slace business person took overdraft cash to daily bases low interest rates
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