1. Secured Overdraft Facility: This is an overdraft limit provided to a customer that is backed by collateral. The limit depends on the value of the asset pledged as collateral. Common types of secured overdrafts are:
Overdraft against property - In this type, the borrower's residential or commercial property is kept as collateral against the overdraft limit sanctioned by the lender.
Overdraft against fixed deposits - Here, the borrower uses their fixed deposits or recurring deposits as security.
Overdraft against equity - Some lenders provide overdraft facilities by accepting the borrower's equity investments like shares, mutual funds, etc. as collateral.