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Key Features of Bank of India Business Loan Overdraft (OD) Facility

  • Flexible Fund Utilization:
    • Access funds up to the sanctioned OD limit as needed for working capital, inventory purchase, or operational expenses.
    • No restrictions on number of withdrawals within the limit (excluding speculative activities per RBI guidelines).
  • Interest on Utilized Amount Only:
    • Interest is charged only on the amount withdrawn, not the entire OD limit, making it cost-effective.
    • Competitive interest rates linked to MCLR, Repo Rate, or External Benchmark Rate.
  • Repayment Flexibility:
    • No fixed EMI structure - repay overdrawn amounts at your convenience.
    • No prepayment penalties for early repayment.
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  • Collateral Options: Available as both secured (against FDs, property) and unsecured (for strong credit profiles) facilities. Secured OD offers lower interest rates.
  • Quick Access to Funds: Instant availability of funds up to approved limit, ideal for urgent business needs. Pre-approved customers may get immediate disbursement.
  • Customizable Credit Limits: OD limits tailored to business financial profile, ranging from ₹2,000 (PMJDY OD) to ₹5 crore (MSME/SME OD).
  • Tenure Options: Typically 12 months (renewable annually). Dropline OD for MSMEs offers up to 180 months with moratorium period.
  • Minimal Documentation: Simplified documentation process, especially for OD against fixed deposits which requires only KYC and FD details.
  • Specialized Schemes: Tailored solutions like PMJDY OD for low-income entrepreneurs, MSME OD for small businesses, and OD against NRE/NRO deposits.
  • Online Management: Manage your OD account through BOI Internet Banking or Mobile App for convenience.
  • No Commitment Charges: No fees on unused portions of the OD limit, unlike some other credit facilities.
  • Supports Business Continuity: Helps businesses maintain operations during lean periods or seasonal fluctuations.
  • Enhances Credit Profile: Timely repayment strengthens credit score for future borrowing needs.
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Benefits of Bank of India Business Loan Overdraft

  • Flexible Fund Access: Withdraw funds as needed from the sanctioned limit to manage cash flow gaps, purchase inventory, or cover operational expenses. Multiple withdrawals allowed within the limit.
  • Cost-Effective Interest: Pay interest only on the amount utilized, not the entire limit. Competitive rates linked to benchmarks like MCLR or Repo Rate ensure affordability.
  • No Fixed EMI Burden: Unlike term loans, repay the overdrawn amount at your convenience as cash flows permit, without fixed monthly installments.
  • Quick Disbursement: Funds available immediately upon approval, with pre-approved customers getting instant access through BOI Internet Banking.
  • Tailored Limits: OD limits customized to your business needs and financial capacity, from small amounts (₹2,000 under PMJDY) to large limits (₹5 crore for MSMEs).
  • Collateral Flexibility: Choose between secured (lower rates) or unsecured (no collateral) options based on your credit profile and needs.
  • Supports Business Growth: Maintain operations during lean periods, seize opportunities, and manage seasonal fluctuations with readily available credit.
  • Special Schemes Available: Benefit from specialized products like PMJDY OD for low-income entrepreneurs or MSME OD with longer tenures.
  • Easy Renewal Process: OD facility is typically valid for 12 months but can be renewed annually with satisfactory account conduct.
  • Digital Management: Monitor and manage your OD account conveniently through BOI's online banking platforms.
  • Builds Banking Relationship: Regular use and timely repayment enhances your creditworthiness for future financial products.
  • No Prepayment Penalties: Repay the overdrawn amount anytime without additional charges, reducing interest costs.
  • Wide Eligibility: Available to proprietorships, partnerships, companies, and self-employed professionals across sectors.
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How to Apply for Bank of India Business Loan Overdraft

  • 1. Check Eligibility
    • Businesses (proprietorships, partnerships, companies) or self-employed professionals
    • Minimum 1-2 years operational history for most schemes (6 months for PMJDY OD)
    • Existing BOI current/savings account with satisfactory conduct
    • Good credit score (700+ preferred for unsecured OD)
    • For OD against FDs: Active BOI fixed deposit or NRE/NRO account
  • 2. Choose the Right OD Scheme
    • PMJDY OD: For BSBD account holders (up to ₹10,000)
    • OD Against FDs/Securities: Up to 90% of deposit value
    • MSME/SME OD: ₹10 lakh to ₹5 crore for registered MSMEs
    • Dropline OD: Longer tenure option for MSMEs
  • 3. Gather Required Documents
    • KYC Documents:
      • PAN card (mandatory)
      • Aadhaar card or other valid ID proof
      • Address proof (utility bill, rental agreement)
    • Business Proof:
      • GST registration (if applicable)
      • Udyam Registration (for MSMEs)
      • Shop Act license or incorporation documents
    • Financial Documents:
      • ITRs for last 2-3 years
      • Bank statements (6-12 months)
      • Financial statements (for larger limits)
    • For Secured OD: FD receipts or property documents
  • 4. Apply Online or Offline
    • Online: Through BOI Internet Banking or Mobile App for pre-approved offers
    • Offline: Visit nearest BOI branch with documents
    • Fill application form with business details, requested limit, and purpose
  • 5. Submit Documents and Await Verification
    • Submit completed application with supporting documents
    • BOI will verify details and assess creditworthiness
    • For secured OD, collateral valuation may be conducted
  • 6. Receive Approval and Activate OD
    • Approval typically within 7-15 days (instant for OD against FDs)

Eligibility Criteria for Bank of India Business Loan Overdraft

  • Applicant Type: Proprietorships, partnership firms, private/public limited companies, or self-employed professionals (doctors, CAs, etc.). For PMJDY OD, individuals with Basic Savings Bank Deposit (BSBD) accounts.
  • Age: Individual applicants or proprietors typically between 21-65 years at application time.
  • Business/Operational History: Minimum 1-2 years of operations for most schemes (verified through financials/GST). PMJDY OD requires 6 months of active BSBD account.
  • Banking Relationship: Existing BOI current or savings account with satisfactory conduct. For PMJDY OD, Aadhaar and mobile number must be linked to BSBD account.
  • Creditworthiness: Good credit history with CIBIL score of 700+ preferred (may be relaxed for secured OD or PMJDY scheme). No major defaults or bounced cheques.
  • Financial Stability: Demonstrated through ITRs (2-3 years), bank statements, and business financials. For MSME OD, positive cash flow and net worth may be required.
  • For Secured OD: Collateral such as fixed deposits (up to 90% of value), property, or other approved securities. Property documents must be clear with no legal disputes.
  • For MSME/SME OD: Udyam Registration mandatory for MSME classification. Business should be in manufacturing, services, or trading sector.
  • For PMJDY OD: Account must show regular credits for 6 months. Primarily for low-income individuals or small entrepreneurs.
  • For OD Against FDs/NRE Deposits: Active BOI fixed deposit or NRE/NRO account. No minimum business history required.
  • Repayment Capacity: Adequate cash flows to service interest and repay overdrawn amounts as per BOI's assessment.
  • Business Location: Should operate from verifiable and stable address. Preference may be given to commercial or owned premises.
  • Regulatory Compliance: Business activities must comply with RBI guidelines (no speculative activities, real estate investments, etc.).
  • Loan Purpose: The overdraft should be used only for business-related working capital needs. The end-use may be verified by the bank.
  • Documentation Readiness: All documents (KYC, business proof, financials) must be up-to-date and consistent with declared income and turnover.
  • Clean Banking Track Record: No history of cheque bounces, loan defaults, or negative remarks in the applicant’s or business entity’s banking record.
  • Tax Compliance: Business must have filed GST returns and ITRs on time, showing transparency in financial reporting.
  • Environmental & Social Risk: The business must not fall under restricted sectors due to environmental or social risk guidelines by RBI or BOI.
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Documents Required for Business Loans Overdraft (OD)

  • Entity Establishment Documents:
    • Sole Proprietorship: Sole Proprietorship Declaration or proof of business continuity (e.g., GST Registration, Shop and Establishment Certificate).
    • Partnership Firms: Certified copy of Partnership Deed.
    • Private Limited Companies: Certified true copy of Memorandum & Articles of Association (MOA/AOA), Board Resolution for loan application.
    • Proof of Business Continuity: Trade License, GST Registration, VAT/Service Tax Registration, or Sales Tax Certificate.
  • Identity Proof:
    • PAN Card, Aadhaar Card, Passport, Voter ID, Driving License, or any government-issued ID for the business owner(s), partners, or directors.
  • Address Proof:
    • Utility bills (electricity, telephone), Lease Agreement, Passport, Trade License, or any government-issued document verifying the business address.
  • Financial Documents:
    • Income Tax Returns (ITR): Latest 2 years’ ITR with computation of income, audited by a Chartered Accountant.
    • Profit & Loss (P&L) Statement and Balance Sheet: For the last 2 years, certified/audited by a CA.
    • Bank Statements: Business Bank Statements for the last 6–12 months (covering at least 75% of banking turnover for multiple accounts).
    • Tax Audit Report: Latest Tax Audit Report (if applicable).
  • Business Profile:
    • Details of the business, including company history, nature of operations, and purpose of the loan.
    • Proof of minimum 3 years of business operation (business vintage).
  • KYC Documents:
    • KYC for all proprietors, partners, directors, or beneficial owners (identity and address proofs).
    • If the applicant is a professional (e.g., doctor, architect, CA), proof of professional degree may be required.
  • Loan-Specific Documents (for Overdraft Against Property or Secured OD):
    • Property documents (title deeds, sale agreement, or lease agreement for residential/commercial properties).
    • Property valuation report or appraisal (if required by the bank).
    • Latest property tax receipts or maintenance bills.
    • For Lease Rental Discounting (if applicable): Lease agreements and rental income proof.
  • Additional Documents (if applicable):
    • GST statements for credit assessment (simplified rule-based assessment).
    • Order copies for Bank Guarantees (BGs) or invoices for Letters of Credit (LCs) if tied to trade facilities.
    • Proof of minimum annual turnover of INR 100 lakhs (for eligibility).
    • For professionals (doctors, architects, CAs, etc.), proof of qualifications and practice.
  • Application Form:
    • Duly filled and signed loan application form.

Factors for Business Loans Overdraft (OD)

  • Business Profile and Vintage: Business Type: Sole Proprietorship, Partnership, Private Limited Company, or Professionals (e.g., doctors, CAs, architects). Business Vintage: Minimum 3 years of business operation is typically required to demonstrate stability and repayment capacity. Nature of Business: The industry, market position, and operational consistency affect risk assessment. Stable industries may get better terms.
  • Financial Health: Revenue and Profitability: Strong revenue streams and consistent profits, as shown in Profit & Loss statements and ITRs for the last 2 years, improve approval chances. Cash Flow: Healthy cash flow, reflected in bank statements (6–12 months), ensures the ability to service the OD. Debt-to-Income Ratio: Lower existing debt obligations increase the likelihood of approval and higher limits.
  • Creditworthiness: CIBIL Score: A strong credit score (typically 700+ for individuals/business owners) is critical. A low score may lead to rejection or higher interest rates. Business Credit History: No defaults on prior loans, overdrafts, or credit facilities. Clean repayment history is essential. Credit Utilization: Low utilization of existing credit lines signals better financial management.
  • Collateral (For Secured OD): Property Type: For overdrafts like Loan Against Property (LAP), residential or commercial properties are accepted as collateral. Property value impacts the OD limit (up to 50–70% of market value). Property Documentation: Clear title deeds, no legal disputes, and valid property papers are crucial. Valuation: Bank-approved property valuation determines the loan-to-value (LTV) ratio.
  • Purpose of the Loan: Usage: OD is typically used for working capital, inventory purchase, or short-term cash flow needs. The bank assesses if the purpose aligns with business operations. Trade Facilities: If linked to Letters of Credit (LCs) or Bank Guarantees (BGs), order copies or contracts strengthen the application.
  • Documentation Quality: Completeness: Submission of all required documents (ITRs, bank statements, KYC, business proofs, etc.) speeds up processing. Accuracy: Discrepancies in financials or legal documents can lead to delays or rejection. GST-Based Assessment: For simplified underwriting, consistent GST filings and turnover data are evaluated.
  • Banking Relationship: Existing Relationship: Businesses with a current/savings account or prior loans with Standard Chartered may get faster approvals or preferential terms. Transaction Volume: High banking turnover (75%+ of transactions through one account) reflects business activity and strengthens the application.
  • Loan Amount and Repayment Capacity: Loan Size: OD limits are based on turnover, cash flow, and collateral value (if secured). Standard Chartered offers ODs from INR 10 lakhs to INR 75 crores, depending on the facility. Repayment Ability: The bank assesses whether the business can manage interest payments and periodic principal reductions (if applicable). Overdraft Utilization: Regular use and repayment of OD balances demonstrate financial discipline.
  • Interest Rates and Fees: Credit Risk Profile: Higher credit scores and stronger financials lead to lower interest rates (typically 9–18% p.a. for secured/unsecured ODs). Collateral: Secured ODs (e.g., LAP) have lower rates than unsecured facilities. Market Conditions: Prevailing RBI repo rates and economic factors influence OD pricing. Processing Fees: Non-refundable fees (e.g., 1–2% of the loan amount) and foreclosure charges impact the overall cost.
  • External Factors: Industry Risk: High-risk industries (e.g., speculative ventures) may face stricter scrutiny or higher rates. Economic Conditions: Market stability, inflation, or policy changes (e.g., RBI guidelines) affect loan terms.

Frequently Asked Questions (FAQs)

What is a BOI Business Loan Overdraft (OD)?
A BOI Business Loan OD is a flexible credit facility that allows businesses to withdraw funds up to a sanctioned limit to meet working capital needs, such as inventory purchase, operational expenses, or cash flow management. Interest is charged only on the amount utilized, not the entire limit.
Who is eligible for a BOI Business Loan OD?
Eligibility depends on the scheme:
  • General OD: Businesses (proprietorships, partnerships, companies), MSMEs, or self-employed professionals with 1-2 years of operational history, good credit score (700+ preferred), and a BOI account.
  • PMJDY OD: Low-income individuals with BSBD accounts active for 6 months, Aadhaar/mobile seeding required.
  • OD Against Securities: BOI FD or NRE/NRO deposit holders (no minimum business history needed).
What are the types of BOI Business Loan OD schemes?
  • PMJDY OD: Up to ₹10,000 for BSBD account holders.
  • OD Against Securities/FDs: Up to 90% of FD or NRE/NRO deposit value, no upper limit.
  • MSME/SME OD: ₹10 lakh to ₹5 crore for manufacturing, services, or trading businesses.
  • Dropline OD: Combines OD flexibility with term loan features, up to 180 months tenure for MSMEs.
What documents are required to apply?
  • KYC: Aadhaar, PAN, Voter ID, passport-sized photos, residence proof.
  • Business Proof: GST registration, Udyam certificate, Partnership Deed, or Certificate of Incorporation.
  • Financials: ITRs (2-3 years), bank statements (6-12 months), Profit & Loss, Balance Sheet.
  • Collateral: FD receipts, property documents (for secured OD).
  • PMJDY OD: Minimal documents (Aadhaar, PAN, BSBD account details).
  • OD Against FDs: FD receipt, KYC only.
How can I apply for a BOI Business Loan OD?
Online:
  • Log in to BOI Internet Banking or Mobile App.
  • Check for pre-approved OD offers or apply via the “Loans” section.
  • Upload documents and submit (best for OD against FDs or pre-approved cases).
Offline:
  • Visit a BOI branch, collect the OD application form.
  • Submit filled form with KYC, business proof, financials, and collateral documents.
  • Track status via branch or customer care (1800-103-1906).
What is the interest rate for BOI Business Loan OD?
Rates are linked to MCLR, Repo Rate, or External Benchmark Rate, with a spread based on credit profile and scheme:
  • Secured OD (e.g., against FDs): Lower rates due to collateral.
  • Unsecured OD: Higher rates due to increased risk.
  • PMJDY OD: Concessional rates for small limits.
Exact rates vary; contact BOI for current rates specific to your profile.
Is collateral mandatory for BOI Business Loan OD?
  • Secured OD: Requires collateral (e.g., FDs, property, securities).
  • Unsecured OD: Available for strong credit profiles (high CIBIL, stable financials).
  • OD Against FDs: Fully secured by FD, no additional collateral needed.
  • PMJDY OD: No collateral required.
What is the tenure of a BOI Business Loan OD?
  • Standard OD: Typically 12 months, renewable annually based on BOI’s review.
  • Dropline OD for MSMEs: Up to 180 months with a moratorium (up to 6 months).
  • PMJDY OD: Up to 36 months, subject to review.
How is the OD limit determined?
Based on:
  • Business turnover, financials (ITRs, P&L, cash flow).
  • Credit score and repayment history.
  • Collateral value (e.g., 90% of FD for OD against securities).
  • Scheme limits (e.g., ₹10,000 for PMJDY, ₹5 crore for MSME OD).
BOI assesses creditworthiness and business needs during approval.
Can I repay the OD early, and are there penalties?
Yes, you can repay the overdrawn amount anytime within the sanctioned limit.
  • No prepayment penalties for early repayment.
  • Interest is charged only on the utilized amount and duration, making early repayment cost-effective.
What are the processing fees for BOI Business Loan OD?
  • OD Against FDs: Often nil or minimal fees.
  • MSME/SME OD: Typically 1–2% of the limit (excluding taxes).
  • PMJDY OD: No or low fees.
  • No commitment charges on unused limits.
Confirm exact fees with BOI during application.
What can I use the OD funds for?
Permitted: Working capital, inventory purchase, operational expenses, or short-term cash flow needs.
Prohibited: Speculative activities, re-lending, agriculture/plantation, or real estate (per RBI guidelines). BOI may verify end-use through declarations or site visits.

List of Bank of India (BOI) Business Loan OD

  • BOI PMJDY Overdraft
  • BOI Overdraft Against Fixed Deposits/Securities
  • BOI Overdraft under CGTMSE Scheme (Collateral-Free)
  • BOI MSME/SME Overdraft
  • BOI Dropline Overdraft for MSMEs
  • BOI Overdraft for Exporters (Pre/Post-Shipment Credit)
  • BOI Overdraft Against NRE/NRO Deposits
  • BOI Cash Credit Overdraft for Working Capital
  • BOI Overdraft for Retail Traders (e.g., Kirana Stores)
  • BOI Overdraft for Self-Employed Professionals