ICICI Bank OD Account Interest Rate: As a salaried individual, if one is facing a cash crunch, a personal loan is generally the first option that one explores. But, if you are an ICICI Bank Salary account holder, here’s another option to get cash to tide over the tight liquidity situation. ICICI Bank has announced the launch of a facility, that enables its Salary Account holders to get approval for an overdraft (OD) instantaneously and in a paperless manner.
Called, ‘Insta Flexicash’, it is a facility offered to ICICI Bank Salary Account customers, whereby they can avail of a line of credit or overdraft facility to meet unplanned or recurring expenses.
Unlike a personal loan, the borrower of OD has to pay interest only on the amount of credit availed and not on the full amount. For example, if the OD is of Rs 4 lakh and the borrower avails Rs 60,000, then interest is to be paid only on the amount utilized i.e. Rs 60,000. The interest payable on the OD is calculated on the basis of the actual amount availed by the account holder, not on the full amount of the OD sanctioned.
Such OD facility helps individuals from missing their Equated Monthly Instalments (EMIs) or cheque bounces due to insufficient funds by providing short-term instant credit.
According to the press release, the facility will come handy to the Bank’s pre-approved account holders who can apply for the OD from the comfort of their home, without visiting a bank branch.
One can avail of this facility by initiating their application online with no documentation. The entire process is an end-to-end fully digital facility that can be availed using the Bank’s internet banking platform. The facility can be sanctioned immediately while customers can start using the approved OD limit within 48 hours.
Here’s a look at the salient features of ‘Insta FlexiCash’:
Extensive credit limit of OD: The Bank offers customers a credit limit worth up to three times their net salary.
Only pay for what you use: Interest should be paid only on the actual OD amount utilised
Flexibility of repayment: Customers have the flexibility to clear the outstanding limit at their convenience. They are only required to pay the interest that is due every month.
No foreclosure charges: The facility offers customers the flexibility to repay the OD amount that they avail, as and when they choose to, without any foreclosure charges
Convenience of auto-renewal: Customers enjoy the convenience of the automated process enhancement and renewal of OD limit every 12 months.
Hassle-free auto sweep-in facility: The auto sweep-in facility enhances convenience for the customers. It automatically sweeps in funds from the OD account to the Salary Account to meet scheduled payments, when required. Upon any credit in Salary Account, the funds are automatically returned to the OD account and interest is charged only on the actual amount utilised and the duration for which it was utilised.
As per the ICICI Bank website, if you have a FlexiCash limit of Rs 1,00,000 with ROI of 12.20% and you use Rs 10,000 for an urgent expense, you will have Rs 90,000 left for other purposes. If you repay Rs 10,000 after 15 days and have not used any more of the FlexiCash funds, your interest payable will be Rs 50.14.
It is important that one has an emergency fund in place to tide over situations such as job-loss or pay-cuts. Such funds can be parked in liquid funds and savings account to address any financial exigencies. The OD facility helps in meeting short term liquidity concerns but should never be used to fund expense other than non-discretionary expenses.
Source:- financialexpress.com