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Dropline Overdraft

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 The interest rate is paid only on the withdrawn cash and not on the total borrowing limit.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.
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HDFC Bank
Max Loan Amt.Upto ₹75L
Rate of Interest10.75% - 28%
Tenure uptoUpto 5 Years
Processing FeeUpto 2%
ICICI Bank
Max Loan Amt.Upto ₹50L
Rate of Interest13.25% 19.25%
Tenure uptoUpto 5 Years
Processing FeeUpto 2%
Axis Bank
Max Loan Amt.Upto ₹75L
Rate of Interest15% - 19.25%
Tenure uptoUpto 5 Years
Processing FeeUpto 2%
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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.

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.

Read: Everything to know about overdraft facility

Comparison of Business Loan Interest Rates offered by Top Banks/NBFCs – 2023

Bank/NBFCs Interest Rate
Axis Bank 10.75% p.a. onwards
Flexiloans 1% per month onwards
HDB Financial Services Ltd. 8% - 26% p.a.
HDFC Bank 10.75% - 25% p.a.
IDFC First Bank 10.50% p.a. onwards
Indifi 1.50% per month onwards
Kotak Mahindra Bank 16% - 26% p.a.
Lendingkart 12% - 27% p.a.
Mcapital 2% per month onwards
NeoGrowth Finance 15% - 40% p.a.
Tata Capital 12% p.a. onwards
UGRO Capital 9% - 36% p.a.
Bajaj Finserv 10% to 26%
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

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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

How Can I Apply for a Business Loan Online?

Step 1: Enter your mobile number in the application form.

Step 2: Enter OTP to verify your mobile number.

Step 3: Provide your personal details.

Step 4: Select a bank account for account aggregator consent.

Step 5: Compare offers and apply for the best-suited loan.

Apply Now

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FAQs

I am a retailer and run a grocery store in Chennai, can I avail Dropline Overdraft facility?

Yes, if you are a retailer, trader or manufacturer you can avail Dropline Overdraft depending upon your creditworthiness and business requirements.

Do I need to maintain a good credit score, if I want to avail Dropline Overdraft facility?

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.

Do I need to submit collateral before taking Dropline Overdraft facility?

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.

What is the maximum borrowing limit sanctioned by banks or NBFCs?

The minimum and maximum borrowing limit depend on the applicant’s profile, business requirements, financial history, repayment capability, creditworthiness, etc.

How Dropline Overdraft is different from an overdraft facility?

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.

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