Od against fd in bank

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Abhinav (Querist)

08 December 2011 I was having an an overdraft account against my FD with the bank with rate of interest to be charged to be 1% above the FD rate. BUT after few months, bank changed the rate of interest of my overdraft a/c from 1% to 2% above the FD rate while my FD has not matured.
IS THE BANK CORRECT OR CAN I DEMAND EXCESS INTEREST CHARGED TO MY????

anurag

anurag (Expert)

09 December 2011 Bank is correct.
Interest on amount overdrawn will be charged at the rate of 2% over the weighted average of the interest rates applicable to the linked fixed deposits subject to a maximum of the Bank's Prime Lending Rate as may be declared by the Bank from time to time

Jagga Rao Malipeddi

Jagga Rao Malipeddi (Expert)

09 December 2011 Normally it is 2% over deposit against which you availed Overdraft. But some banks extend the overdraft with 1% over deposit rate. What is the interest rate mentioned in the D.P.Note executed by you at the time of availing Overdraft. As regards overdraft against bank's deposits, they can not change the rate arbitrarily. Look into the D.P.Note and have a discussion with the Branch Manager.

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