Dropline Overdraft

A dropline overdraft facility allows a borrower to overdraw funds from their current account up to a limit that the financial institution sets. An overdraft is an affordable form of borrowing since you only need to pay interest on the amount that you withdraw.

This withdrawal limit of the dropline overdraft facility eventually reduces every month from the original limit fixed by the lender. The interest that you need to pay is calculated on a daily basis, and you need to pay it at the end of the month. 

For example, suppose you avail of a dropline overdraft of ₹1 Lakh with a tenure of 12 months. In this case, the overdraft limit will be reduced by 1,00,000/12, which equals ₹8,333. 

Therefore, the overdraft limit available to you for the next month will be ₹91,667. Also, you can make full or partial repayments, as per your affordability and preference. 

Here are some of the popular financial institutions that offer the dropline overdraft facility:

• Aditya Birla Finance

• AU Small Finance Bank

• Axis Bank

• Bajaj Finance

• HDFC Bank

• ICICI Bank

• Kotak Mahindra Bank

• SBI

• Tata Capital

• YES Bank

• RBL Bank

Check out the documents that a business needs to submit to avail of the dropline overdraft facility:

Common Documents:

• PAN card

• Filled application form

• Passport-sized photographs of applicants and co-applicants

• Identity Proof: Aadhaar card, voter ID, driving licence, passport 

• Address Proof: Passport, voter ID, utility bills

For Self-Employed Individuals/Sole Proprietorships:

• GST returns of the last year

• Audited ITR of the last 3 year

• Bank statements for the previous year

• P&L statements and balance sheets for the last 3 years

• Details of existing loans, if any

For Partnership Firms / Private Limited Companies:

• GST returns of the last year

• Details of existing loans, if any

• Partnership Deed of partnership firms

• Last 1 year’s bank statement of the borrower’s account 

• Certificate of Incorporation for Private Limited Companies

Reference of all T&C necessarily refers to the terms of the Partners as regards to pre-approved offers and loan processing time amongst other conditions.