Dropline Overdraft

A dropline overdraft facility allows you to withdraw funds from your current account up to a limit that the financial institution sets. However, this overdraft limit gradually decreases every month over the loan tenure.

Interest is charged only on the amount utilised, not on the entire sanctioned limit. You can repay or deposit funds at any time to reduce the outstanding balance.

For example, suppose you receive a dropline overdraft of ₹1 Lakh for 12 months. Your limit will be reduced by ₹8,333 each month. Next month, your available limit will be ₹91,667. You may repay in full or part, based on your budget and choice.

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

Here are the entities that are eligible to apply for a dropline overdraft facility:

• Entrepreneurs

• Sole proprietorships

• Self-employed professionals

• Partnership firms

• Private company

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.