How does an overdraft work?

This is a lending arrangement on a current account allowing the account holder to overdraw the 50% of monthly income and with a specific expiry date. The overdraft can be marked over a few days or up to a period of one year. This is a facility that we advance to our valuable customers which enables them to spend before their monthly income is credited.
  • Usually marked for short durations where there is certainty of incoming funds. In cases of businesses these can be marked for up to one year with periodic reviews to monitor usage.
  • Done within 2-3 days
  • Payment period is 3 months renewable
  • The limit marked should be less than the net income for salaried or monthly average turnover in the cases of businesses
  • The account is expected to fluctuate between a debit balance and credit balance if the limit is appropriate and usage is correct.
  • It should not be granted for projects such as construction or purchase of capital items. Such requirements should be funded by medium or long term loans.
  • A penalty interest rate is applied if the limit is exceeded or the account does not revert to credit on expiry of limit. This reflects the level of discipline required in order to utilise this facility.
  • Overdrafts are easy and quick to arrange and interest is only charged when the overdraft is utilised
  • Flexibility, an overdraft is given when needed or requested for
  • A monthly salary in the local currency account.
  • We mark a minimum limit of 50% of the net salary credited to the account less any loan repayments.
  • On expiry date of the facility the account should revert to credit if the appropriate and correct analysis of the limit was applied at the time of request.

The requirements for an overdraft are as follows:

  • Completed application form.
  • Valid identification documents.

Have a question? Find answers here.

Do you need advice?
Call (250) 788-143-000.

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