A sub-type of Working Capital Funding
Drop-Line OD (DLOD)
A sub-type of Working Capital — an overdraft whose limit reduces (drops) on a fixed schedule.
Drop-Line Overdraft (DLOD) is a sub-type of our Working Capital offering. You get an overdraft limit that steps down on a pre-set schedule, so you pay interest only on what you use while steadily reducing your exposure — ideal for longer-term working-capital needs.
Interest rates and terms are indicative and subject to lender approval.
Drop-Line OD (DLOD)
Key features
- Sub-type of Working Capital
- Tenure up to 15 years
- Limit reduces on a fixed schedule
- Interest only on utilisation
- Secured facility
Eligibility
- Operating business with turnover
- Banking track record
- Acceptable collateral & credit profile
Documents
- KYC & business proof
- GST & bank statements
- Financials / ITR
- Collateral documents
In depth
Understanding Drop-Line OD (DLOD)
A Drop-Line Overdraft is a hybrid facility combining features of a term loan and an overdraft, where the available credit limit systematically reduces every month.
- The Mechanism
- Limit = Sanctioned Amount - (Monthly Amortization of Principal). Interest is charged only on the utilized amount.
- Key Components
- Sanctioned limit, Drop frequency, and Utilization rate.
- What the Results Mean
- It forces financial discipline by slowly reducing the business's reliance on borrowed funds.
- Smart management
- Actively monitor the dropping limit so your business is not caught short on working capital.
Regulatory source
Falls under RBI standard lending practices and overdraft facility directives.