Uttar Bihar Gramin Bank Over Draft against Bank Term deposit

Need quick cash for a family function, legal paperwork, school fees, or a medical bill—but don’t want to break your fixed deposit? Uttar Bihar Gramin Bank (UBGB) Overdraft against Bank Term Deposit gives you instant liquidity while your deposit keeps earning. It’s simple, fast, and usually cheaper than taking a fresh personal loan.

What this facility really is (in plain words)

An overdraft (OD) is a flexible credit line linked to your Bank Term Deposit (FD) or other approved securities (like LIC policies or NSC/KVP). The bank marks a lien on your FD (or accepts other security), and you receive a credit limit you can draw from as and when you need it. You pay interest only on the amount you actually use and only for the days you use it. Prefer a one-time payout instead of a revolving line? UBGB also offers a demand loan against the same securities.

Who can apply (Eligibility)

• All UBGB account holders are eligible, subject to standard checks and KYC.
• You must hold a UBGB Bank Term Deposit (for OD against FD) or have approved securities (LIC, NSC, KVP) as described below.

Two ways to borrow: OD vs Demand Loan (Nature of facility)

• Overdraft (OD): A revolving limit. Withdraw, repay, and withdraw again within the sanctioned limit. Ideal for uncertain or staggered expenses.
• Demand Loan: One-time disbursal, repaid on a fixed schedule. Good for clear, one-off needs.

Both options are secured by your FD or other approved security, so processing is typically quicker and pricing is sharper than unsecured loans.

How much you can get (Margin & indicative limit logic)

UBGB sets a margin—you borrow up to the security value minus the margin. Think of margin as a safety cushion.

• Against Bank Term Deposit: 10% margin.
  Example: FD value ₹5,00,000 → limit up to ₹4,50,000 (approx.).
• Against LIC policy: 10% of surrender value as margin.
  Example: Surrender value ₹3,00,000 → limit up to ₹2,70,000 (approx.).
• Against NSC/KVP: 40% of face value as margin.
  Example: NSC face value ₹2,00,000 → limit up to ₹1,20,000 (approx.).

Exact limits depend on security type, documentation, and bank policy at the time of sanction.

What it costs (Interest rates made simple)

• Against Bank Term Deposit: FD rate + 1%.
  If your FD earns 7.00% p.a., your OD will be ~8.00% p.a.
• Against approved other security (LIC / NSC / KVP): 12.50% p.a. (indicative per scheme).

Why this is smart: Your FD continues to earn its original interest, while you pay a modest spread (just +1%) on the amount you actually use. With OD, daily interest applies only on utilized funds—keeping costs lean if you repay quickly.

Quick math example (so you can “feel” the cost)

• You hold a UBGB FD of ₹5,00,000 @ 7.00% p.a.
• UBGB sanctions OD up to ₹4,50,000 (10% margin).
• You use ₹2,00,000 for 30 days, then repay.
• Interest cost: 8.00% p.a. (FD 7% + 1%).
  Approx interest = 2,00,000 × 8% × (30/365) ≈ ₹1,315.
• Meanwhile, your FD keeps earning at 7% p.a. the entire time.
  Net effect: short-term, low-friction liquidity without smashing the FD.

When to pick OD vs Demand Loan

• Choose OD if expenses are uncertain, seasonal, or phased (legal fees in stages, school fees by term, medical bills in parts). Pay interest only for days used.
• Choose Demand Loan if you need a lump sum now and will repay in fixed EMIs (renovation, one-time purchase, big event).

What you can use it for (Purpose)

The bank allows OD/Demand Loan against deposit/securities for a broad set of social and legal expenses—ceremonies, education, medical, urgent family needs, documentation, or similar legitimate personal outlays. If your situation is unique, discuss it at the branch; they’ll guide you to the right structure.

Documents & KYC (what to bring)

• KYC: PAN (or Form 60/61), valid photo ID, address proof, photographs.
• For FD-linked OD/Loan: Your UBGB FD receipt/details for lien marking.
• For LIC: Original policy and surrender value letter.
• For NSC/KVP: Original certificates.
• Any existing loan details if the bank requests them.

Neat paperwork typically means same-day or very quick processing.

Step-by-step: getting funds fast

1. Visit your UBGB branch and state that you want an OD or Demand Loan against FD (or approved security).
2. Confirm the limit (security value minus margin) and applicable rate.
3. Sign lien/assignment papers on your FD/policy/certificates.
4. Get your OD limit activated (cheque book/online access) or receive demand loan disbursal into your account.
5. Use and repay at your pace; with OD, every early rupee you return reduces interest immediately.

Smart habits to keep costs low

• Borrow only what you need, only when you need it. With OD, delaying a draw by a week literally saves 7–12.5% p.a. for that week.
• Repay early. Even a partial repayment cuts your daily interest.
• Keep a small emergency buffer in savings to avoid drawing the OD for tiny expenses.
• Track due dates if you picked a demand loan; prepay whenever you have surplus—no prepayment charges.
• Review security maturity. If your FD is nearing maturity, coordinate rollover and OD renewal smoothly with the branch.

FAQs (straight answers)

Does my FD stop earning interest if I take an OD against it?
No—the FD continues to earn its contracted rate. The bank just marks a lien on it.

What’s the maximum tenure?
ODs are generally subject to periodic review/renewal. Demand loans carry a defined tenure—your branch will specify.

Can I top-up my OD later?
If your FD grows (renewal with interest), or you add more security, the limit can be reviewed.

Is there a processing fee or stamp duty?
Standard charges (if any) are shared by the branch upfront; there are no prepayment penalties.

Can I use LIC/NSC/KVP instead of an FD?
Yes—subject to margins (LIC: 10% of surrender value; NSC/KVP: 40% of face value) and 12.5% p.a. rate as per scheme.

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Bottom line: UBGB’s Overdraft against Bank Term Deposit is the cleanest way to unlock cash without breaking your FD. With a low 10% margin, FD rate + 1% pricing, and the choice of OD or Demand Loan, you get flexibility, speed, and control over interest costs. Walk into your UBGB branch with your FD receipt (or LIC/NSC/KVP documents) and KYC—walk out with liquidity that respects your savings.