LOAN OVER DRAFT

51.  LOAN
OVER DRAFT
1.      Meaning
A lumpsum amount is advanced for a period of one year or more
2.      Account
Separate loan account is to be maintained by bank

3.      Borrowing Party
It is given to any party who fulfils certain conditions.
4.      Interest Charged
It is charged on amount sanctioned whether utilised or not.
5.      Security
     Bank demands security for sanctioning loan.

A specify limit is sanctioned for a period say one to three months.

Separate account is not maintained. It is included in current account.

It is provided only to current account holders.


It is charged on amount withdrawn.


Bank may not ask for security, if amount is less.