Best Overdraft Facilities For Salaried Individuals In India (Bank Comparison)

Having a dependable overdraft (OD) facility linked to your salary account can make handling short-term liquidity crunches easier. In order to ascertain which overdraft options provide the best value for salaried individuals, we assess some of the top options currently offered in India. We assist you in determining best overdraft facility for salaried individual by examining interest rates, fees, overdraft limits, and general flexibility.

What is an Overdraft Facility?

An overdraft facility provides a credit line for relief during temporary cash flow issues. You can withdraw funds multiple times, up to your assigned credit limit. This makes overdraft a handy tool for short-term cash flow management or emergencies, instead of committing to a full-blown loan. This type of short-term loan must be repaid within a set period, typically 12 months, which can be renewed for ongoing use.

Overdrafts are especially useful for salaried account holders because many banks estimate eligibility based on fixed monthly salary and salary-account history, making approval smoother and faster compared to personal loans.

How Best Overdraft Facility for Salaried Individual Works?

• Pre-approved credit limit: Once you qualify, the bank sets an overdraft limit. This limit is usually based on your salary, stability, and account history. For many banks, it is about 2 to 3 times your monthly salary.
• Interest only on used amount: You pay interest only on the amount and duration you actually overdraw, not on the full limit.
• Flexible repayments: There are no fixed EMIs. You can repay as soon as you receive funds, often with your next salary credit. Early repayment usually does not incur pre-payment penalties.
• Minimal documentation: Since salary accounts already exist, banks need little additional paperwork to enable the overdraft.
• Short-term, revolving credit: An overdraft is ideal for covering short-term cash needs. The limit and facility may be reviewed periodically, for example, annually, based on your salary credit and the bank’s policy.

Best Overdraft Facility for Salaried Individuals: Banks Comparison

Following is the table that summarises the prominent overdraft facilities for salaried individuals, with recent data on interest rates, limits and charges.

Another alternative for salaried individuals is the Federal Bank OD, known for its hassle-free processing and moderate overdraft limits. Salaried employees can also explore the Bajaj OD for salaried, which offers flexible utilisation and higher borrowing limits compared to standard bank overdrafts.

Rates and limits are indicative based on public data available in 2025. Actual sanction depends on the bank’s internal underwriting, salary, credit history, and account activity.

How Real World Offers Compare (Trends And Highlights)?

• According to a 2025 report, many OD facilities in India still offer interest only on the amount used, not the approved limit. This makes overdraft more cost-effective than traditional personal loans, especially for short-term needs.
• Some banks, like Axis Bank, limit overdraft credit lines for salary account holders to a multiple of their monthly income or to a fixed amount, such as up to ₹5 lakh. This approach reduces risk and promotes transparency.
• Lenders like Kotak Mahindra Bank are pushing more flexible overdraft and credit-line products for salaried individuals, including those with higher incomes. They offer larger limits while highlighting the “interest on-use” structure and the need for minimal collateral.
• Overdraft continues to be a favoured choice over personal loans for meeting short-term needs, such as salary gaps and emergencies, thanks to its flexibility and generally lower interest costs when used wisely.

Who Should Choose Which Overdraft Facility?

Choose best overdraft facility for salaried individual based on your profile needs-

• If you are looking for the lowest interest and the convenience of a salary account, ICICI salary overdraft is often the best option. It has low costs and allows easy repayment through a salary sweep, making it ideal for frequent but small to medium overdraft needs.
• If you need a modest overdraft for emergencies, ranging from ₹20,000 to ₹1.25 lakh, HDFC salary overdraft or a salary account overdraft from a public bank like PNB OD may work well. Their simple activation process and minimal requirements are suited for basic short-term needs.
• Salaried users looking for a simple, reliable public-sector choice might also look at SBI overdraft salary accounts. These accounts have low limits and easy activation.
• If you anticipate occasional large expenses, such as major medical bills, urgent home repairs, or one-time payments, Kotak OD loan option or similar products from NBFCs can provide higher limits.
• If you need a balance between flexibility and limits for mid-level cash needs, up to ₹5 lakh, Axis Bank’s salary-account overdraft appears well-balanced, offering reasonable interest and a good credit line.
• If you prefer the reliability and simplicity of a public-sector bank, even with a modest overdraft limit, PNB or similar salary-account overdrafts might be a good choice, especially if you want to avoid frequent renewals or complicated paperwork.

Key Precautions And Practices for Overdraft Facilities

While overdraft can be very useful, borrowers should keep in mind a few caveats:

• Interest accumulates on the amount used daily. If you borrow heavily and repay slowly, costs can rise quickly. Overdraft works best when you repay on time.
• The overdraft limit and renewal depend on regular salary deposits and your account history. If your salary account activity becomes irregular or your salary decreases, the bank may lower or eliminate the overdraft facility.
• Overdraft is not a substitute for long-term financing. It is best for short-term needs. For larger or longer-term financial commitments, a structured loan or EMI-based credit may be more affordable.
• Interest rates and fees vary greatly between banks and lenders, especially NBFCs. Always check the specific terms before making a commitment.
• Avoid relying on overdraft too much. Using it frequently may indicate poor cash flow management and could affect your future creditworthiness. Treat overdraft as a temporary solution, not a regular source of credit.

Why Overdraft Facility Is Better Than A Personal Loan For Short Term Needs?

Interest is charged only on what you use, not on the total approved amount. Because of this, an overdraft is usually cheaper than an instant personal loan for short-term borrowing.

• If you already have a salary account, there is little to no documentation required. You won’t need to provide property collateral or deal with lengthy loan paperwork.
• Repayment is often flexible, such as through automatic transfers from your salary. There is also no strict EMI schedule, which gives you some breathing room.
• For emergencies, cash-flow issues, or short-term needs, an overdraft remains an appealing and flexible choice.

How My Mudra Help Salaried Borrowers In OD Facilities?

As many options exist, it can be confusing to choose the right OD or loan product. That’s where My Mudra becomes valuable:

• My Mudra helps salaried individuals assess and compare different OD and loan products available in 2025. It takes into account your salary, repayment ability, credit profile, and specific needs.
• The service guides to help you choose between overdraft, personal loan, or other credit options. It aims to direct you to the most cost-effective and suitable choice instead of a one-size-fits-all solution.
• For those who need larger sums or have uncertain cash flow, My Mudra’s financial consultancy ensures you understand repayment terms and avoid taking on too much debt.

In short, My Mudra can help you navigate the credit landscape and make informed, responsible decisions. We help choose the best overdraft facility for salaried individual, whether you need short-term liquidity or greater financial support.

Also Read:
- Working Capital Loan vs Business Overdraft: Which is Right for Your Business?
- Instant Access to Funds with a Personal Loan Overdraft