Overdraft Loan for Salaried Employees
Most banks offer overdraft loan for salaried individuals in India as they have a regular and steady income source. Salaried people can avail of overdraft loans against their salary from banks where they have salary accounts. An overdraft loan for salaried is a pre-approved credit line that can be activated instantly, and it allows you to pay interest only on the amount utilized by you instead of paying interest on the entire loan amount. You can avail yourself of a credit line of up to Rs. 55 lakhs at attractive interest rates starting from 10% p.a. Usually, the borrowed amount can be repaid in a tenure of 12 months.
Key Features of an Overdraft Against Salary
The following are some key features of the overdraft facility for salaried employees:
- An overdraft loan for salaried individuals is a pre-approved credit line that can be activated instantly.
- This facility allows customers to pay interest only on the amount utilized instead of on the entire loan limit.
- The documentation requirement for a personal loan overdraft is typically straightforward to meet. You often have to provide zero to minimal documentation
- This credit facility involves zero to minimal foreclosure charges
- Multiple withdrawals can be made via online transactions to meet an array of personal expenses as many times as needed.
- You have the flexibility to repay the overdraft loan amount when you receive your next salary, reducing your financial stress.
- Overdraft facilities are typically not reported by lenders to credit bureaus, so they do not affect your credit score.
- The OD account is usually linked to your salary account to ensure auto debit towards the OD account.
- Several private as well as public sector banks offer this facility to salary and savings account holders.
- An overdraft facility has no minimum monthly repayment requirement however, the amount you have to pay should be within the overdraft limit.
- Joint borrowers are allowed overdrafts.
- Repayment is not done in EMIs. Instead, you can repay whatever amount you like, whenever you like.
Compare Overdraft Loans for Salaried from Different Banks
Below is the table for key details of overdraft against salary offered by some of the top lenders in India:
| Name of Lender | Interest Rate (p.a.) | Processing/Activation Fee | Maximum Loan Amount |
|---|---|---|---|
| ICICI Bank | 12.35% to 14.10% p.a. | Rs. 1,999 to Rs. 2,999 + GST | 3 times net monthly salary |
| HDFC Bank | 15% to 18% p.a. | Up to Rs. 1,999 | Rs. 1.25 Lakhs |
| Axis Bank | 16% to 19% p.a. | Rs. 750 + tax | Rs. 5 Lakhs |
| Kotak Mahindra Bank | 13.50% p.a. onwards | Up to 5% + taxes | Rs. 20 Lakhs |
| HSBC | 14% to 18% p.a. | Nil | Rs. 50 Lakhs |
| SBI | 14.85% p.a. onwards | Nil | Rs. 2 Lakhs |
| Bajaj Finserv | 10% to 31% p.a. | Up to 3.93% | Rs. 55 Lakhs |
| Tata Capital | 14.75% p.a. onwards | Up to 4% of the loan amount + GST | Rs. 35 Lakhs |
| Karnataka Bank Limited (KBL) | 11.68% p.a. onwards | Up to 0.50% of the loan amount | Rs. 25 Lakhs |
#1. ICICI Bank Overdraft Loan for Salaried: FlexiCash
- Interest Rates: 12.35% to 14.10% p.a.
- Loan Amount: This salary overdraft scheme offers up to 3 times your net monthly salary.
- Repayment Tenure: 12 months. Auto-renewed after 12 months on meeting the bank’s norms.
- Processing Fee: Starting from Rs. 1,999 + GST up to a maximum of Rs. 2,999 + GST.
- Annual Renewal Fee: Rs. 1,999 + GST.
- Foreclosure Charges: Nil.
- Eligibility: Offered to select ICICI Bank Salary Account customers
#2. HDFC Bank Overdraft Loan for Salaried: Salary Plus
- Interest Rates: 15% to 18% p.a.
- Loan Amount: Credit line up to 3 times your salary (minimum Rs. 25,000 to maximum Rs. 1.25 Lakhs).
- Repayment Tenure: 12 months. It can be renewed after 12 months, subject to meeting the Bank's policy and appraisal norms.
- Processing Fee: Up to Rs. 1,999.
- Annual Renewal Fee: Rs. 250 + government levies and taxes.
- Foreclosure Charges: Nil.
- Eligibility: It is a pre-approved credit line for select HDFC Bank Salary Account holders
#3. Axis Bank Overdraft Loan for Salaried: 24x7 FlexiCredit
- Interest Rates: 16% to 19% p.a.
- Loan Amount: Credit line up to 5 times your salary (minimum Rs. 30,000 to maximum up to Rs. 5 Lakhs).
- Repayment Tenure: 12 months. It can be renewed after 12 months, subject to meeting the Bank's norms.
- Activation Fee: Rs. 750 + tax.
- Annual Renewal Fee: Rs. 750 + tax.
- Foreclosure Charges: Nil.
- Eligibility: Axis Bank Salary Account holders aged between 21 to 59 years with a minimum net monthly income of Rs. 15,000
#4. Kotak Mahindra Bank Overdraft Loan for Salaried: Personal Loan Overdraft
- Interest Rates: 13.50% p.a. onwards.
- Loan Amount: This overdraft facility for salaried employees offers Rs. 1 Lakh to Rs. 20 Lakhs. 1 year fixed limit and drop line limit afterwards, depending on the limit and tenure offered.
- Repayment Tenure: Up to 72 months.
- Processing Fee: Up to 5% of the loan amount + taxes.
- Foreclosure Charges: Nil; 4% + taxes on the current sanction limit in case the lock-in period of 12 months is not served.
- Eligibility: Individuals aged between 21 to 58 years, with a credit score of 730 or higher & earning a minimum monthly income of Rs. 50,000
#5. HSBC Overdraft Loan for Salaried: HSBC Anytime Credit
- Interest Rates: 14% to 18% p.a.
- Loan Amount: Up to 5 times your monthly salary, subject to a maximum limit of Rs. 50 Lakhs.
- Repayment Tenure: 12 months. After that period, the overdraft will be automatically renewed if it meets the Bank’s norms, unless the customer asks for closing the facility.
- Processing Fee: Nil.
- Annual Renewal Fee: Nil.
- Eligibility: Indian salaried applicant aged between 21 to 60 years with a minimum salary of Rs. 33,333 per month
#6. SBI Overdraft Loan for Salaried: Overdraft in Salary Package Accounts
- Interest Rates: A fixed interest rate of 14.85% p.a. (5.95% above 6 months MCLR) onwards without reset will be charged.
- Loan Amount: Up to 2 times your net monthly salary with a maximum limit of Rs. 75,000 for the Gold Variant, Rs. 1,50,000 for the Diamond Variant, and Rs. 2,00,000 for the Platinum Variant.
- Repayment Tenure: Up to 6 months.
- Processing Fee: Nil.
- Eligibility: Salary account holders aged up to 54 years, with a minimum CICI score of 650
#7. Bajaj Finserv Overdraft Loan for Salaried: Flexi Term Loan
- Interest Rates: 10% to 31% p.a.
- Loan Amount: Rs. 20,000 to Rs. 55 Lakhs.
- Repayment Tenure: This OD facility for salaried individuals comes with tenures of 12 to 96 months.
- Processing Fee: Up to 3.93% of the loan amount.
- Flexi Facility Charge: Up to Rs. 12,999.
- Annual Renewal Fee: Up to 0.295 of the total withdrawable amount.
- Foreclosure Charges: Up to 4.72% of the total withdrawable amount.
- Eligibility: Indian salaried employees aged between 21 to 80 years, with a credit score of 685 or higher & earning a minimum monthly income of Rs. 25,001
#8. Tata Capital Overdraft Loan for Salaried: Personal Loan Hybrid Term Loan
- Interest Rates: 14.75% p.a. onwards.
- Loan Amount: Rs. 2 Lakhs to Rs. 35 Lakhs.
- Repayment Tenure: 12 to 84 months.
- Processing Fee: Up to 4% of the loan amount + GST.
- Annual Renewal Fee: 0.25% of the reduced assigned amount or Rs. 1,000 (whichever is higher).
- Foreclosure Charges: Up to 4.5% on the dropped down amount.
- Eligibility: Salaried individuals aged between 21 to 58 years, having a credit score of 725 or higher
#9. Karnataka Bank Limited Overdraft Loan for Salaried: KBL Suvidha Overdraft Loan
- Interest Rates: 11.68% p.a. onwards.
- Loan Amount: Up to 24 times your recent take-home salary or Rs. 25 Lakhs (whichever is lower).
- Repayment Tenure: Up to 24 months.
- Processing Fee: Up to 0.50% of the loan amount.
- Foreclosure Charges: Up to 2% of the outstanding amount + GST.
- Eligibility: Indian resident salaried individuals aged at least 21 years, with a minimum monthly salary of Rs. 10,000 & self-employed: with an annual income of Rs. 1,20,000
Common Uses of an Overdraft Loan for Salaried
- Emergency fund: An Overdraft loan can provide you with a financial safety net during an emergency. It allows you to handle unexpected expenses, like medical bills, home maintenance, car repairs, kids’ school or college fees, etc., without resorting to high-interest loans.
- Multiple online withdrawals: With an overdraft facility, you can access funds online to meet a variety of personal expenses, whenever and as many times as needed.
- Transfer funds across accounts: It gives you the freedom to transfer funds easily across bank accounts.
- Pay bills: You can use the funds to pay credit card bills and utility bills or manage various payments seamlessly.
- Working capital requirements: Overdraft can be used for meeting working capital and business cash flow requirements.
FAQs
An overdraft loan for salaried employees, or a salary overdraft (salary OD), is a short-term credit facility for salaried individuals that allows them to withdraw more money from their salary account than they have, up to a pre-defined limit (credit line), to cover expenses when their account balance is insufficient.
Yes, salaried persons can get an overdraft facility. This facility is often referred to as a salary overdraft against a salary account. It allows them to withdraw more than their current bank balance up to a pre-defined limit.
To close your salary OD account at ICICI Bank, you need to repay the entire outstanding amount and submit a formal closure request via the bank's website or by visiting a branch.
SBI salary account overdraft comes at a fixed interest rate of 14.85% p.a. (5.95% above 6 months MCLR) onwards without reset.
Yes, some banks provide an overdraft facility to savings account holders, enabling them to withdraw more funds than their account balance.
HDFC offers an OD limit or credit line to salaried customers up to 3 times their salary, subject to a minimum of Rs. 25,000 and a maximum of Rs. 1.25 Lakhs.
Reshma Rawat is a passionate writer, with a decade of experience in writing for a variety of domains (finance, technology, lifestyle, e-commerce, real estate, etc.). Currently, she is working as Assistant Manager - Content @MyMoneyMantra, and writes blogs & webpages on financial products (loans, credit cards, insurance, financial policies by government, mutual funds, etc.
Abhijeet Singh has comprehensive experience in business writing, content management, SEO, social media and user analytics. Key areas of expertise include stock markets and personal finance.