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Can Pensioners Avail Overdraft Facility?
By Anupama Deshpande | Jan 7, 2019

An Overdraft Facility is a facility which is used to issue a cheque or withdraw cash from your bank account even if you have a nil balance in your account. It can be understood as a short term borrowing or debt. Its duration and the amount are limited by the bank. Its time period is generally kept maximum upto 12 months. The amount offered under overdraft facility to the customer by the bank differs from bank to bank and customer to customer.

The overdraft amount is repayable by the customer on demand by the bank.


Now one question may arise in your mind as to can pensioners avail overdraft facility?

The answer is "yes". Banks also offer this overdraft facility to the pensioners who are maintaining their pension account with the bank and drawing pensions from the bank. This facility can be availed by the pensioners on a secured basis i.e. they need to submit some collateral to avail this facility.

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Usage of Overdraft Facility by Pensioners

Pensioners may also require immediate funds to meet out some urgent and important financial needs such as medical emergency, to clear existing high interest debt, buying a valuable asset, etc. So such overdraft facility can be helpful for them on such circumstances.

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Eligibility for Overdraft Facility by Pensioners

  • The person should have a pension account with the bank from which he/ she is drawing his/ her pension.
  • The person should have a fixed account with the bank.
  • The person needs to submit collateral for availing this facility. The collateral can be house, shares, insurance policy, bank FD, etc.
  • The person should fulfil the terms and conditions as stipulated by the bank

Benefits of Overdraft Facility by Pensioners

  • You can meet short term funding assistance
  • The rate of interest is generally lower than that of personal loan i.e. on concessional rates
  • You need to pay the interest only on the amount of overdraft used
  • Processing time is low

Drawbacks of Overdraft Facility by Pensioners

  • Available only to Pensioners
  • Limited amount is available under this facility
  • You need to submit a security to avail this facility
  • It is offered for a very short term by the banks
About Anupama Deshpande
Anupama is a Co-Founder of CodeForBanks.com. She is an MBA (Finance) and Chartered Financial Analyst (CFA). She also carries a Fellowship degree in Life Insurance Sector and is a Master of Computer Application (MCA). She is an expert in Finance Field with an experience of over 18 years on different managerial positions in finance industry including Stock Market, Depository and Mutual Fund Sectors. Apart from that she has remained for few years in the field of marketing as well. Her suggestions and advice for investments have been very useful to many people.
Her vast interest & expertise in the field of finance have encouraged her to write the articles so that others can also get benefitted out of them. She never loses any opportunity to learn and be creative. She is a valuable asset for CodeForBanks.com & important resource to all those around her.

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