Dropline Overdraft

Dropline overdraft is a facility provided to borrowers where they can overdraw from their current account up to an agreed limit. Overdraft is an effective way of borrowing as customers pay interest only for the period of utilization, another advantage of availing overdraft is that they can deposit the amount or withdraw whenever they wish to by not exceeding the limit.

This facility is a combination of overdraft and Term loans against residential or commercial property. This can benefit Professionals, Sole proprietors, Proprietorship firms, Partnership firms, or Private limited companies. This product is good for businessmen who have day-to-day requirements of working capital.

Tenure of Dropline overdraft can be from 1 year to 15 years and can be used on a monthly, quarterly, half-yearly, or yearly basis or as per borrower needs.

Unsecured Dropline overdraft is issued to businessmen with good financial status without any collateral.

An example:

If the initial tenure of the overdraft facility is 60 months and the original overdraft limit granted is Rs. 10 lakh, then after 1 month the operating limit shall automatically be reduced by 10,00,000/60 = Rs. 16,666. This means that the operating limit available at the end of the first month shall be (10,00,000 – 16,666) = Rs. 9,83,334. This calculation shall proceed for the second month as well and each month further, up till the last month of repayment tenure.