Overdraft

An overdraft is a type of credit facility that allows an individual or business to withdraw more funds from a bank account than the available balance. It is a short-term borrowing arrangement that is typically used to cover temporary shortfalls in cash flow. For instance, you can access the overdraft facility from banks in India to withdraw ₹5,000 from your savings account even if you have just ₹100 in the account. This facility comes with a higher interest rate but allows you to address emergencies. In India, overdraft facilities are commonly used by businesses and individuals to manage urgent and short-term credit needs.