By Paskola Referral: Overdraft loans are usually based on some collateral or securities especially in terms of Bank Fixed Deposits. Usually a bank, depending upon the credit history, cash flows, tenure of banking relationship and the repayment history of the business or individual promoter takes an approval for a certain fixed overdraft limit. Based on the limit, the overdraft amount can be utilized and interest is charged by the bank only on the utilized amount. This loan can be utilized in any manner as long as the principal and the interest is being repaid on time.
Overdraft limit is also available on an individual basis for personal utilization based on his credit history.
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