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An Overdraft gives your business a sanctioned limit it can draw from as needed. You withdraw only what the moment requires, repay when collections come in, and interest is normally charged on the amount actually utilised rather than on the full limit.
What this facility gives you.
Draw only what you need
The limit sits ready. Interest usually applies to the utilised balance, not to the sanction.
Revolving and renewable
Repayments restore the available limit, and the facility is typically reviewed and renewed annually.
Built for cash-flow gaps
Designed for the timing mismatch between paying suppliers and receiving customer payments.
Who it suits
- Businesses with seasonal or uneven collection cycles
- Traders and distributors funding recurring stock purchases
- Firms that need standby liquidity rather than a lump sum
- Owners who want to avoid paying interest on idle funds
Documents usually required
- KYC of applicant and co-applicant
- Business registration and constitution documents
- Last 12 months bank statements of the operating account
- Latest ITRs, financials and GST returns where applicable
- Security or property documents, where the limit is secured
The final checklist depends on the lender, your constitution type and the facility structure.
How Overdraft is typically structured.
Indicative only. Every lender applies its own policy, and your sanctioned terms come from the lender assessing your case.
| Type of facility | Overdraft, Flexi Overdraft, Dropline Overdraft or Cash Credit |
|---|---|
| Security | Secured or unsecured, depending on lender and limit |
| Interest | Usually charged on the utilised amount, lender terms apply |
| Review cycle | Typically renewed annually, subject to conduct |
| Assessment basis | Banking turnover, operating cycle and credit history |
Frequently asked.
How is an Overdraft different from a Term Loan?
A Term Loan is disbursed once and repaid on a fixed EMI schedule. An Overdraft is a limit you dip into repeatedly – useful when the requirement is recurring and the timing is unpredictable.
What is a Dropline Overdraft?
A variant where the sanctioned limit reduces on a defined schedule over the tenure. It keeps the flexibility of an overdraft while ensuring the exposure winds down over time.
Is interest charged on the entire limit?
Under most overdraft structures, interest applies only to the amount drawn and for the days it stays drawn. Charges and the exact basis vary by lender, so this is confirmed from the sanction terms.
Other loan solutions.
Business Loan
A Business Loan helps you fund expansion, inventory, equipment, hiring or any other legitimate business requirement.
Learn more →Loan Against Property
A Loan Against Property lets you raise funds against a residential, commercial or industrial property you already own, while continuing to use it.
Learn more →Term Loan
A Term Loan is a fixed amount disbursed upfront and repaid over an agreed tenure through regular instalments.
Learn more →Considering Overdraft?
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