Fincare Small Finance Bank extends instant overdraft facility against FDs
PremiumThis is a real-time, convenient and efficient way of getting a short-term loan, rather than breaking the FD prematurely
Short-term funding needs, especially for health emergencies, can arise anytime, anywhere, especially in the current pandemic times. The Bank has extended an instant overdraft facility against FD to help customers tide over such funding requirements. Customers can avail of the instant overdraft facility against FD anytime, anywhere. Customers do not need to liquidate their FD to avail this facility.
“Overdraft facility against fixed deposits, used wisely, can help tackle short-term financing needs smartly without the need to liquidate the fixed deposit before maturity and also avoid rate penalty," said Keyur Doshi, Chief Financial Officer, Fincare Small Finance Bank.
FDOF (Overdraft against Fixed Deposits) facility of the Bank
This is a real-time, convenient and efficient way of getting a short-term loan, rather than breaking the FD prematurely; In this FDOD facility, customers can withdraw up to 75 per cent of the fixed deposit value. The facility is available to Customers holding a Fixed deposit with Fincare Small Finance Bank and active on Mobile Banking App.
How does it work?
Let’s say you have an FD of ₹1 Lakh with Fincare Small Finance Bank earning interest @ 7% p.a., with a maturity of three years. The bank is offering an overdraft limit of 75 per cent on this FD i.e. ₹75, 000. If you withdraw ₹30,000 from the overdraft limit against this fixed deposit, the interest shall be payable only on ₹30,000 and not on the entire ₹75,000.
The interest rate charged shall be 2% above the fixed deposit rate (assuming you are a non-senior citizen). So, you will pay 9 per cent per annum interest only for the period (days or months) for which the amount is utilised and not for the entire tenure of fixed deposit with the bank.
Why should you opt for overdraft against FD?
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Life can throw many surprises – a temporary downturn in business, or a job loss or a reduction in salary due to the COVID-19 pandemic. The overdraft facility against FD is a recommended option to meet immediate financial needs or medical emergencies in the family. This facility comes at a cost lower than options such as personal loans, pre-approved loans against credit cards etc.
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