India-based Federal Bank has unveiled a new loan product, Fed Rise, which is an overdraft facility against recurring deposits (RD). It is aimed at providing operational comfort and flexibility for customers.
During a transaction, if the system detects shortage of funds in the customer’s savings account, it automatically takes the deficit amount from the overdraft account, which can be repaid later by the customer.
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Federal Bank noted that at the time of opening of a recurring deposit, 90% of the maturity value of the RD is sanctioned simultaneously as an overdraft limit.
"Then at any point of time, 90 per cent of the balance (inclusive of interest) in the RD can be drawn by the customer for his/her needs. As the customer makes payment to the recurring deposit account, the drawing power rises," the bank added.
As the overdraft limit is set while opening the RD, the customer does not have to visit the bank for availing the deficit amount, but can withdraw it through debit card, point of sale (POS), net banking or mobile banking.
Federal Bank retail banking division head and general manager, A Surendran, said Fed Rise is going to be a trend setter and a sought after loan product owing to the operational ease it offers as a result of automatic placement of funds at the client’s disposal.
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By GlobalDataFed Rise is available across 1,150 branches of Federal Bank in India.
