SBI (State Bank of India) offers various overdraft facilities with different interest rate structures to meet diverse customer needs. The interest rates vary based on the type of security provided, the amount borrowed, and the customer’s profile. This article provides detailed information about SBI’s overdraft interest rates, different overdraft schemes, and important features that borrowers should know before applying for an overdraft facility.

Understanding SBI Overdraft Facility

An overdraft facility is a type of short-term loan that allows you to withdraw more money than what is available in your account. SBI offers multiple overdraft options that can help you access funds during financial emergencies without breaking your fixed deposits or other investments. The overdraft facility depends on your repayment capacity, the purpose of the overdraft, and the amount required 3.

What is an Overdraft?

An overdraft is a credit arrangement where the bank allows you to borrow money up to a certain limit from your account even when there’s no money in it. You only pay interest on the amount you use, making it different from a regular loan, where you pay interest on the entire loan amount regardless of usage 5.

Types of SBI Overdraft Facilities

SBI provides several types of overdraft facilities to cater to different customer needs. Each type has its eligibility criteria, interest rates, and repayment terms.

1. Overdraft Against Fixed Deposit (Time Deposit)

SBI’s overdraft against time deposit is a popular option where you can get a credit line without breaking your fixed deposit. This is also called SBI Loan Against Time Deposit 1 5.

Key features include:

• Loan amount: Minimum Rs. 5,000 to maximum Rs. 5 crores
• Margin: Up to 95% of your fixed deposit value
• Interest rate: 1% above the relative time deposit rate (charged on daily reducing balance)
• No processing fee
• No prepayment charges
• Available through both bank branches and internet banking (for single holders)13

For joint fixed deposit holders, a visit to the nearest SBI branch is required to avail of the overdraft facility. The repayment period is capped at:

• STDR/e-STDR – up to 5 years
• TDR/e-TDR – up to 3 years 3

2. Overdraft Against Salary

This facility is designed specifically for salaried individuals who need short-term funds.

Key features include:

• Requires a minimum of 3 months’ salary credit history
• Overdraft amount available up to 2 months’ net salary
• Must be repaid within 6 equated monthly installments
• Interest rates vary based on your profile and relationship with the bank 3

3. Overdraft Against Home Loan (SBI Maxgain)

For customers with existing home loans, SBI offers the Maxgain overdraft facility.

Key features include:

• Minimum overdraft amount – Rs. 20 lakhs
• No maximum cap on the overdraft amount
• Regular home loan terms apply to borrowers, including the repayment schedule
• Interest rates typically follow the home loan interest rate structure 3

4. NRI Overdraft Against Deposits

For Non-Resident Indians (NRIs), SBI provides an overdraft facility against their deposits. The interest rate for this service is 1% above the interest payable on the fixed deposit. The overdraft amount can range from a minimum of ₹25,000 to a maximum of ₹5 crores.

SBI Overdraft Interest Rate Structure

The interest rate on SBI overdraft varies based on the type of security provided. Here’s how the interest rates are structured for different overdraft facilities:

Interest Rate for Overdraft Against Fixed Deposit

For an overdraft against a fixed deposit, SBI charges an interest rate of 1% above the relevant time deposit rate. This is calculated on a daily reducing balance, meaning you only pay interest on the amount you use 1 5.

Current Fixed Deposit Rates and Overdraft Implications

Additionally, SBI offers a special 444-day deposit scheme with rates of 7.25% for general citizens and 7.75% for senior citizens, as noted in the same source. These rates are crucial for determining the overdraft interest rate, as they form the base to which the 1% is added.

For Example:

• A general citizen with a 1-year FD at 6.00% would have an overdraft rate of 7.00% (6.00% + 1%).
• A senior citizen with a 3-year FD at 7.25% would have an overdraft rate of 8.25% (7.25% + 1%).
• For the special 444-day scheme, a general citizen’s overdraft rate would be 8.25% (7.25% + 1%), and for a senior, 8.75% (7.75% + 1%).

This variability ensures that the overdraft rate aligns with the FD’s earning potential, offering a tailored financial solution.

Interest Rate for Cash Credit and Large Overdrafts

For cash credit accounts and overdrafts with limits above Rs. 1 lakh, SBI has linked the interest rates to the RBI repo rate. The formula is:

• Current repo rate + spread of 2.25%

Additional risk premiums may be applied based on the borrower’s risk profile, following the standard industry practice 4.

Features and Benefits of SBI Overdraft

The SBI overdraft facility offers several advantages that make it a preferred choice for many customers:

Flexible Withdrawal and Repayment

You can withdraw funds as per your requirements, up to the approved limit. You only pay interest on the amount used, not on the entire approved limit 1.

No Need to Break Fixed Deposits

One of the biggest advantages is that you don’t need to break your fixed deposits to access funds, which helps you continue earning interest on your deposits while meeting your fund requirements 1 5.

Competitive Interest Rates

The interest rates for overdraft against fixed deposits are typically lower than personal loans or credit cards, making it a cost-effective borrowing option 1.

No Processing Fee

SBI does not charge any processing fee for overdraft facilities against fixed deposits, which reduces the overall cost of borrowing 1.

No Prepayment Charges

You can repay the overdraft amount at any time without incurring any prepayment penalties 1.

How to Apply for an SBI Overdraft

The application process for SBI overdraft varies based on the type of overdraft and whether you’re a single account holder or a joint account holder.

For Overdraft Against Fixed Deposit

Single fixed deposit holders can apply through:

• Internet banking (online)
• Visiting the nearest SBI branch

Joint fixed deposit holders must visit the nearest SBI branch to apply for the overdraft facility 3.

For Other Types of Overdraft

For a salary-based overdraft or a home loan-based overdraft, you generally need to visit your SBI branch and submit the required documents for assessment.

How to Repay SBI Overdraft

SBI offers multiple options to repay your overdraft amount:

1. Set up an ECS (Electronic Clearing Service) facility to automatically debit the overdraft amount from your account every month
2. Issue a cheque for the overdraft amount to your SBI Branch
3. Pay online using the SBI Yono app3

The repayment schedule depends on your repayment capacity and the type of overdraft facility. For overdraft against fixed deposits, the maximum repayment period can be up to 5 years for STDR/e-STDR and up to 3 years for TDR/e-TDR 3.

Conclusion

SBI’s overdraft facility provides a flexible borrowing option with competitive interest rates. The interest rate structure varies depending on the type of overdraft, with rates typically being 1% above the fixed deposit rate for overdraft against time deposits, and repo rate-linked for larger overdrafts and cash credit accounts.

Before applying for an SBI overdraft, it’s important to understand the interest rate structure, repayment terms, and eligibility criteria to make an informed decision. With its competitive interest rates and flexible terms, SBI overdraft can be an excellent solution for your short-term financial needs without jeopardising your investments.