What is Overdraft Facility in Savings Account and Its Benefits | Kotak Mahindra Bank
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Picture this, you are a company owner, and your company has run out of adequate funds necessary to mitigate the daily operations. In such scenarios, it may be a major challenge to arrange the necessary funds to continue with your company smoothly. What must your move be?

Here’s where the overdraft facility comes in handy for current account company owners. The overdraft facility permits you to withdraw the required funds when your bank account has no funds or has inadequate funds to cover the company's daily needs. Basically, an overdraft option allows you to borrow a pre-set proceed over and above your balance. You are charged interest on the amount withdrawn through the overdraft facility and are granted complete repayment flexibility as per your cash inflows. Now, you may have a question – Is an overdraft facility available just in a current account or can savings account holders also opt for it?

Is an overdraft facility available in savings accounts too?

Yes, an overdraft facility is available in savings accounts too. This is one of the crucial benefits of a savings account, which many are not aware of. However, this facility is available in specific savings account variants and not in all savings account types. For instance, Kotak Mahindra Bank allows overdraft facility in Grand Savings Account for Senior Citizens. This facility is allowed on Kotak senior citizen bank account to financially help senior citizens in times of financial exigencies.

Through this senior citizen savings deposit account, senior citizens can opt for an overdraft facility against their fixed deposit of up to 85 per cent without the need for liquidating their fixed deposit. Besides offering overdraft benefits, the account also offers a saving bank interest rate of up to 7 per cent per annum with the additional benefit of Kotak ActivMoney. In Kotak ActivMoney, the excess balance deposit in   is transferred automatically to a fixed deposit, which allows the account holder to earn higher returns.

Moreover, note that the requirement to open a savings account online for senior citizens is quite simple. The account seeker must meet the bank’s basic eligibility criteria and keep specific documents handy. Eligibility criteria to qualify for a senior citizen bank account are –

  • Must be an Indian resident
  • Must be 55 years and above

The required documents to open savings account online for senior citizens are –

  • Identity proof (driving license, passport, Aadhaar card, or voter ID)
  • Address proof (passport, voter ID, driving license, Aadhaar card, bank statement, utility bill, or updated bank account passbook)
  • Signature proof (PAN card, passport or driving license)
  • Latest passport-size photos

What are the benefits of having an overdraft facility in a savings bank account?

Available funds

An overdraft facility provides you instant access to the required funds when you do not have any in your bank account. So, this facility is prudent for temporary financial mismatches, unanticipated expenditures, or exigency crunches. Having this benefit in your savings account keeps you stress-free as you know you have a financial backup on which you can rely in times of unexpected fund shortages.

Just pay for the used amount

You just require paying the interest on the amount that you use through the overdraft facility and no interest is charged on the overall limit available to you on this facility.


As is evident, the overdraft option is tremendously helpful when you lack the required funds for any sudden expense. Besides helping you with just the required funds, the bank even allows flexible repayments and charges interest on just the amount withdrawn as a loan.


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Disclaimer: This Article is for information purposes only. The views expressed in this Article do not necessarily constitute the views of Kotak Mahindra Bank Ltd. (“Bank”) or its employees. The Bank makes no warranty of any kind with respect to the completeness or accuracy of the material and articles contained in this Article. The information contained in this Article is sourced from empaneled external experts for the benefit of the customers and it does not constitute legal advice from the Bank. The Bank, its directors, employees and the contributors shall not be responsible or liable for any damage or loss resulting from or arising due to reliance on or use of any information contained herein. Tax laws are subject to amendment from time to time. The above information is for general understanding and reference. This is not legal advice or tax advice, and users are advised to consult their tax advisors before making any decision or taking any action.