The OD Full Form in Banking is Overdraft. Withdrawing funds from a Current Account that has an overdraft capacity permits you to do so even if the account balance is negative.
Overdraft services allow customers to borrow more money from their bank than they would normally be able to. An overdraft limit could be established in advance, depending on the nature of your banking relationship, should the need arise.
This one-of-a-kind overdraft privilege can come in handy in the event of an unexpected or unanticipated financial emergency. The primary reason for this is to satisfy any pressing commercial needs.
As long as you don’t go over the withdrawal limit, you can take out as much money as you like. Based on the customer’s Current Account balance, repayment history, credit rating, etc., this line of credit is granted to the consumer.
The bank may classify these services as a short-term credit facility that must be paid back by the agreed upon deadline. Overdraft interest will be calculated based only on the amount borrowed and the number of days or weeks the loan was used for.
The bank has complete discretion over the terms of the overdraft and the length of time borrowers are allowed to carry balances. Current Account overdrafts are not required to be repaid via Equated Monthly Installments.