An overdraft facility shall be granted for working capital purposes only as revolving line of credit that self-liquidates as the merchandise is sold. For this reason, overdraft facilities should be encouraged only for borrowers whose accounts swing and turnover warrant increased working capital for their business. Overdrafts facilities will be granted for duration not exceeding twelve (12) months and may be renewed or extended if there is no ‘ever greening’ or hard-core elements and all interest and charges due have been paid; and the account has swung to credit balance at least once during the facility tenure.
Temporary overdrafts facilities shall be granted to credit-worthy customers with good account operation record. The tenor of the facility shall be less than twelve months. The purpose of this facility shall be to meet temporary cash deficit in the working capital cycle of the business. TOD shall be approved at respective approving authority subject to compliance with requirements of this policy. The amount of TOD shall not exceed 25% of the existing exposure of the borrower.