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Overdrafts

Overdrafts

Loan arrangement under which a bank extends credit up to a maximum amount (called overdraft limit) against which a current (checking) account customer can write checks or make withdrawals. The most common form of business borrowing, an overdraft is a type of revolving loan where deposits (credits) are available for re-borrowing, and interest is charged only on the daily overdraft (debit) balance. It is, however, also a demand loan: the facility can be cancelled (and entire outstanding amount ‘called’) at any time by the lender at its discretion, without any warning notice or explanation if the overdraft is secured by an asset or property, the lender has the right to foreclose on the collateral in case the account holder does not pay.

There are generally three types of overdraft:

  • Against Salary
  • Against Immovable Assets
  • Against Movable Assets
Features & Benefits
  • Flexibility to apply for an overdraft to suit whatever your need is.
  • An ideal way to handle short term changes in your cash-flow
  • Avoid unnecessary charges on being over your limit
  • Once you have this credit facility on your current account, you can overdraw up to an agreed limit
  • The amount and term can be agreed in advance
Eligibility
  • Overdraft against Property can be availed by self-employed individuals, self-employed professionals, sole proprietorships, partnership firms and private limited companies (including closely-held public limited companies.)
  • Overdraft against Property is available to Indian Residents only.
  • Minimum net profit as per latest year ITR / Financials of Rs. 150000
  • Overdraft against Property can be availed by self-employed individuals, self-employed professionals, sole proprietorships, partnership firms and private limited companies (including closely-held public limited companies.)
  • Minimum age at loan sanction – 23 years. Maximum age at loan maturity – 65 years.
  • Banks & NBFCs have a approved list of companies for overdraft facility, Employees of these approved companies can avail overdrafts easily.
  • Minimum net monthly income must be Rs. 15000
Documents
  • PAN Card – For Individual / Partnership Firm / Company
  • Identity Proof – Any one (e.g. Voter ID / Driving License / Passport)
  • Address Proof – Any one (e.g. Voter ID / Driving License / Passport / Telephone Bill / Electricity Bill / Registered Lease Deed or Sale Agreement / Bank Statement)
  • Business Continuity Proof – Any one document dated 5 years old (Bank Statement / Sales Tax Challans / IT Returns / Shops & Est. Certificate / COI / Partnership Deed)
  • Passport Size Photographs for all applicants and co-applicants

 

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