Overdraft Limits
 

 

Features of Pure Overdraft facility :

 
  • An overdraft facility is a formal arrangement with a bank that allows an account holder to withdraw funds in excess of the amount deposited. This type of financing is most commonly used by businesses as a way of making their working capital more flexible. It also allows one to fulfill short term and long term business requirements, working capital requirement or business expansion..

  • The Overdraft limit is fixed on the basis of current turnover and future projections to some extent and is subject to eligibility and sanction. Only monthly Interest is payable which is calculated on daily reducing basis and is normally charged at the end of each month.

  • Longer term Overdraft is allowed against securities like Shares, Mutual funds, surrender value of Insurance policies, Debentures, Fixed immovable assets such as residential/ commercial/ industrial properties, land etc.

  • Short term clean overdrafts are available on the basis of existing bank relationships.

  • Primary security: Hypothecation of stocks and assets financed by Bank.

  • Additional Collateral: Extension of charge over current assets, fixed Assets and other existing collateral, personal guarantees of the promoters/partners/directors of the unit.

  • Successfully servicing the loan within its terms can entail a more liberal line of credit for future use.

  • Balance Transfer of existing loan is possible to take advantage of better terms and additional amount.

   
 
Process...
  • On complete set of documents being provided as per check list forwarded documents are sent to the respective bank/institution for processing.

  • On acceptance of the documents by the bank/institution a physical verification of residence & office and documents is initiated along with current credit history report as maintained by Cibil.

  • Post positive verification of residence and office and acceptable credit history as captured by Cibil a personal interview /discussion is arranged at the customer's office by the bank/institution.

  • In case of fresh projects the process is stretched as the bank has to analyse the back ground of the applicant/firm/company and the Technical feasibility/financial viability of the project based on various parameters and existing market conditions.

  • Based on and subject to credit comfort and mitigation of any further queries the file is forwarded for sanction to the appropriate authority.

  • On sanction loan agreement is executed and all additional documents as required post personal discussion including original title deeds etc. has to be submitted along with either post- dated cheques or security cheques in case of repayment through electronic clearance (ecs).

  • The loan is disbursed subsequently.

Documents Required.


  • Photograph (Applicant and Co-applicants).

  • Pan card (Applicant and Co-applicants).

  • Pan card of firm/company if applicable.

Residence & Office address Proof :


Latest Electricity bill or Receipt of Maintenance Charges or valid Passport or Purchase/Lease Deed/Leave & License Agreement of Residence or Office Premises. (Either residence or office has to be self or family owned as per current policy)


Business Existence Proof:


VAT/CST/Service tax Registration certificate or SSI Permanent Registration Certificate or Warehouse Receipts or Shop & Establishment Certificate.


  • Business Profile on Company's Letterhead.

  • Partnership deed / Memorandum and Articles of Association with certificate of incorporation as the case may be. (Amended / Reconstituted partnership deed or Form 32 where ever required)

  • Last three years complete set of IT papers including Computation of income, Profit & Loss A/c. and Balance Sheets with all schedules, annexures, Auditor's / Director's report, Form 3CA/3CB, & 3CD as the case may be (duly certified by a Chartered Accountant wherever applicable).

  • Latest 12 months Bank statement of the Firm of all accounts.

  • Sanction/Closure letter of all existing loans including CC/OD etc.

  • Individual Income Tax Returns of the Individual/Partners/Directors for last three years.

  • Latest 12 months Bank statement of Individuals, Partners, Directors.

  • List of the Existing Directors & Share Holding pattern of the company on letter head duly certified by Chartered accountant or latest copy of ROC to substantiate the same.

  • Property papers- Complete set -chain of agreements where applicable, Share certificate copy (Front & Back), Approved plans, CC & OC.

 
Eligibility...

Some Basic Requirements :

  • Should have vintage of at least 3 years.
  • Should be profit making for the past 2 years.
  • Co-applicant required as a Guarantor.
  • Age Limit 25 yrs Minimum to 65 yrs maximum.

 

 
FAQ...

Q. What are the prepayment Charges?

Pre payment charge of 4% to 6% is levied on balance principle outstanding. For what Purposes are Business loans given? Business loans are given towards Working Capital, Short Term Cash Need, Business Expansion, New inventory, Buying Machinery/equipment etc.

Q. What are the Eligibility Criterias?

Should have vintage of at least 3 years.
Entity should be Self Employed with Min Age 25 yrs & Max Age 65 yrs.
Should be profit making for the past 2 years Co-applicant required as a Guarantor:

Q. Who can aval a Business loan?

  Business installment loan can be availed by :

Self employed individuals / professionals Sole proprietorship firms Partnership firms Private limited companies and closely held limited companies.

Q. What are the benefits of Business loans?

Speedy loan processing - 4 to 7 business days Fast and easy documentation . Hassle-free loans Loans From 5 lakh to Rs.3 cr Repay with easy equated monthly installments.

Q. What is the minimum annual turnover eligibility?


Minimum turnover required is Rs.1 crore PAWhat is the interest rate charged on BIL? Rate of interest varys from 18 % to 22% depending on loan amount,credit assessment and other parameters.

Q. What are the basic documents required for applying?


Photographs Identity,Age & Signature verification proof Business Bank statements for last 6 months 2 year audited financials including Profit & Loss,Balance sheet and IT returns 3 years Business existence Proof Address proof - Residence and Office.

Q. What is the turnaround time for the disbursal of the loan?


Disbursal of the loan may take a minimum of 7 working days from the time of submission of loan related documents as requested by the Bank.

Q. What prameters are looked into before sanctioning a BIL?


  • Liquidity
  • Solvency
  • Profitability
  • Asset Owned
  • Track record
  • Management
  • Business model
  • Industry and product/service
 
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CIBIL- ALL YOU WANTED TO KNOW
CIBIL is an acronym for Credit Information Bureau India Limited. It is India's first credit information bureau, a storage bank of information, which contains the credit history of commercial and consumer borrowers. CIBIL provides information to its Members in the form of credit information reports.
CIBIL creates value for financial institutions by providing objective information that helps them manage risk and devise appropriate lending strategies, thus reducing cost and maximizing portfolio profitability. CIBIL benefits both credit grantors and consumers by collecting, analyzing, and delivering information on credit histories of millions of consumers and businesses. With information from CIBIL, credit grantors are empowered to make sound and informed credit decisions.
TO WHOM ALL IS CIBIL APPLICABLE?
CIBIL is applicable to anyone applying for any credit facilities such as Personal loans, Home loans, Business loans, Mortgages, Loan against property, Auto loans, Secured and Unsecured loans, Credit cards, any type of finance or credit facility from banks, financial institutions, non-banking financial companies, housing finance companies, state financial corporations and credit card companies etc.

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