A Drop Line Overdraft Loan is a structured overdraft facility where the sanctioned limit gradually reduces over a fixed tenure. Unlike a regular overdraft, this type of loan enforces planned repayment while still allowing flexible fund utilization within the decreasing limit.

As the limit reduces periodically, borrowers are encouraged to repay the outstanding amount in a systematic manner. Interest is charged only on the amount used, ensuring better cost control. This makes it an effective option for long-term working capital needs with financial discipline.

Drop line overdraft loans are generally secured and suited for businesses looking to balance liquidity with controlled borrowing. The reducing limit helps borrowers avoid excessive dependence on credit while maintaining access to funds during the loan period.

Ideal for: Businesses requiring long-term working capital with structured reduction and controlled credit exposure.