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Overdraft

Particulars Overdraft
Introduction Loan arrangement under which a bank extends credit up to a maximum amount (called overdraft limit) against which a current account customer can make withdrawals.

It is, however, also a demand loan: the facility can be cancelled (and entire outstanding amount ‘called’) at any time by the lender at bank discretion, without any warning notice or explanation.

Types Any Businessman providing sufficient security by hypothecating of Stock and/or Book Debts in order to qualify for amount of fund required.
Documents Required
  • Application form
  • Demand Promissory note
  • Deed of Security over deposit(s)
  • Letter of approval accepted by borrower(s)