हिंदी में पढ़े
Dropline Overdraft is a financial instrument that allows a borrower to overdraw cash from his/her current account up to an agreed limit, wherein the withdrawal limit reduces each month from the sanctioned limit. The interest rate is paid only on the withdrawn cash and not on the total borrowing limit. Money can be deposited anytime to reduce the outstanding balance. The interest rate is calculated on a daily basis and is charged at the end of each month.
Let’s understand the Dropline Overdraft facility with 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.
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Features of Dropline Overdraft
- Withdrawal limit reduces each month from initially sanctioned limit
- Comes as both secured and unsecured loan
- Do not require collateral to be submitted, in case of unsecured Dropline Overdraft facility
- Interest rate is charged on a monthly basis but calculated on a daily basis
- Borrowing limit can go up to Rs. 15 crores, however, it depends on the Bank’s sole discretion
- Borrowed amount is credited to only current accounts
- Can be used on a monthly, quarterly, half-yearly or yearly basis
- Usually the Dropline limit is assigned for 1 – 15 years, it may vary from bank to bank
- One-time processing fee is charged
- Do not levy yearly renewal charge
- It is a mix of term loan and overdraft facility
- Opted mostly by manufacturers, retailers and traders
Eligible Entities
Dropline Overdraft facility can be availed by entrepreneurs, self-employed professionals, private limited companies, partnership firms, sole proprietorships, and many more entities.
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Comparison of Business Loan Interest Rates offered by Top Banks/NBFCs – 2023
| Bank/NBFCs | Interest Rate | |
| Axis Bank | 10.75% p.a. onwards | Apply Now |
| Flexiloans | 1% per month onwards | Apply Now |
| HDB Financial Services Ltd. | 8% - 26% p.a. | Apply Now |
| HDFC Bank | 10.75% - 25% p.a. | Apply Now |
| IDFC First Bank | 10.50% p.a. onwards | Apply Now |
| Indifi | 1.50% per month onwards | Apply Now |
| Kotak Mahindra Bank | 16% - 26% p.a. | Apply Now |
| Lendingkart | 12% - 27% p.a. | Apply Now |
| Mcapital | 2% per month onwards | Apply Now |
| NeoGrowth Finance | 15% - 40% p.a. | Apply Now |
| Tata Capital | 12% p.a. onwards | Apply Now |
| UGRO Capital | 9% - 36% p.a. | Apply Now |
Popular Banks/NBFCs offering Dropline Overdraft facility
- Aditya Birla Finance
- Axis Bank
- Bajaj Finserv
- HDFC Bank
- ICICI bank
- Kotak Mahindra Bank
- SBI
- Tata Capital
- Yes Bank
Documents Required
| General Documents | Self-Employed Individuals / Sole Proprietorship | Partnership Firms / Private Limited Companies |
| Application form | Last year’s GST returns | Payment Statement of existing loan(s), if any |
| Passport-sized photographs of all the applicants and co-applicants | Last 3 years’ ITR (audited) | Partnership Deed in case of partnership firms
|
| PAN Card | Last 1 year’s bank statement | Last year’s GST returns |
| Identity Proof – Aadhar Card, Passport, Voter ID, Driving License | Status of existing loan(s), if any | Last years’ bank statement from borrower’s account mentioned in balance sheet |
| Address Proof – Passport, Voter ID, Utility Bills (Electricity/Telephone) | Last 3 years’ financials, such as Profit & Loss statement and balance sheet | Certificate of Incorporation for Private Limited Companies
|
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FAQs
Q. I am a retailer and run a grocery store in Chennai, can I avail Dropline Overdraft facility?
Ans. Yes, if you are a retailer, trader or manufacturer you can avail Dropline Overdraft depending upon your creditworthiness and business requirements.
Q. Do I need to maintain a good credit score, if I want to avail Dropline Overdraft facility?
Ans. It is always recommended to maintain a good credit score, as this facility is a type of unsecured loan so banks majorly rely on the creditworthiness and repayment capacity of the applicant.
Q. Do I need to submit collateral before taking Dropline Overdraft facility?
Ans. Dropline overdraft facility comes in both secured and unsecured forms, so if you want to take a secured loan then the collateral is required to be submitted.
Q. What is the maximum borrowing limit sanctioned by banks or NBFCs?
Ans. The minimum and maximum borrowing limit depend on the applicant’s profile, business requirements, financial history, repayment capability, creditworthiness, etc.
Q. How Dropline Overdraft is different from an overdraft facility?
Ans. In an overdraft facility, the sanctioned borrowing limit remains the same or does not change until the limit is reached, whereas in Dropline Overdraft the withdrawal limit reduces each month from the sanctioned limit.
Q. How is the interest rate charged on borrowed amount?
Ans. The interest rate is calculated on a daily basis and charged every month.