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Blog
2 mins Read | 11 Months Ago

Overdraft Facility on Corporate Fixed Deposits: How Does it Work?

Calculate Interest on Overdraft Against Fixed Deposit

 

Overdraft Facility on Corporate Fixed Deposits: How Does it Work?

An overdraft facility is a credit arrangement between a bank and customers who have a Fixed Deposit (FD) with the same, including Corporate FDs. Banks also give account holders the option to withdraw money from their FD account up to a certain limit through partial withdrawal (90% for ICICI Bank customers) or by “breaking” their deposit altogether. Both these options can negate the interest earnt. and attract potential penalties as well. In case an FD holder is in need of money, instead of partially withdrawing or breaking it,  they can leverage their FD to get an overdraft against it. ICICI Bank's overdraft facility on Corporate Fixed Deposits (CFD) enables you to use the amount of your FD without breaking it, or losing on interest earnt.

The overdraft amount should be within the limit set by ICICI Bank, and the interest rate applicable to it will be 1%-2% above your FD rate. A processing fee will be levied for availing this facility. You can repay the overdraft amount through the FD or other bank accounts. Let’s examine how a corporate OD works for ICICI Bank Fixed Deposit.

How OD against ICICI Corporate FDs works

A Fixed Deposit is one of the most sought after investments as it can be used to meet short- and long-term finances with surety. An overdraft is a short term loan option that can be taken by putting up an FD as a security. When an overdraft is taken against an ICICI FD, the customer can avail of a loan up to 90% of their deposit amount. They'll need to pay the interest only on the amount utilised, so there is no need to worry about high repayment. And the good thing is the customer can withdraw funds up to the overdraft limit at any point in time without any penalty fees. This makes the OD against corporate FD an attractive financing option for those who need to manage their cash flows efficiently.

Difference between Premature Withdrawal and OD against FD

In a financial emergency, you can also withdraw your FD funds prematurely in the form of an overdraft against FD. However, to do so, you are required to apply for the same.

FD overdrafts are some of the easiest methods ICICI Bank provides you to borrow money from the bank. Your Fixed Deposit investment is utilised as security in this facility, and the money is subsequently given to you as an overdraft. This means you save yourself from paying a penalty by using the overdraft against the FD facility.

ICICI Bank also provides a premature withdrawal facility from the FD before its maturity date. This means that if you decide to exercise this option, you will need to pay a nominal penalty.

Ideally, it’s better to avoid withdrawing a portion of the deposit and losing on the returns , especially when you can take an OD up to 90% limit of your FD, without suffering any loss.

How to Apply for an OD against Corporate FD

You can apply for an OD against Corporate FD by following below methods 

ICICI Bank Corporate Internet Banking  (CIB)

Apply for an OD up to 90% of your Corporate FD’s value in a few simple steps with ICICI Bank's Corporate Banking Portal. Get low interest rates and sail through a convenient paperless process. To proceed with the application, follow these steps

  1. Login using your ID and password

  2. Click on ‘Exclusive Offerings’

  3. Click on ‘OD Against FD’

  4. Select the account number in which you to receive the amount 

  5. Then you’ll need to select the FD(s) (maximum 7) against which you wish to take the overdraft

  6. Accordingly, the amount you can take will be calculated and displayed

  7. Choose the amount and tenure that suits your finances

  8. Click on ‘Proceed and review your receipt

  9. Agree to the terms and conditions

  10. You’ll be redirected to the NSDL page

  11. Enter your Aadhaar Card number and get an OTP on your registered mobile number

  12. And that’s it! Your transaction will be complete

  13.  For a video tutorial, click here.

Login to ICICI Bank’s Corporate e-Banking online by here .

If there’s further help needed, please feel free to contact our customer service team for any further assistance. ICICI Bank  is here to help in any way.

 You can also  visit the nearest ICICI Bank branch and  discuss the process for getting an Overdraft against your Corporate Fixed Deposit. Our team will provide you with the necessary documents and guide you on the procedure for opening a Fixed Deposit. Once your OD against FD is approved, you can access the funds whenever you need to. After approval, the funds will be transferred to your account.

Conclusion 

Applying for an Overdraft on Corporate FD can galvanise and support your business’s growth, it can help stabilise operations, and optimise cash flows during trying times. Whether you need it or not,  it’s always good to have options that can be availed quickly, because business never sleeps. 

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