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OVERDRAFT LOAN
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1. Overdraft credit facility is sanctioned to businessmen, traders, professionals etc who have current account with the bank and on the security of immovable properties of the borrower.
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2. This loan will be sanctioned as per the RBI directives and as concerned to the priority sector & weaker section lending, to business, trade, industry and profession of the borrower.
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3. The following are the securities to be obtained for sanction of overdraft loan:
a) Term Deposits kept with the Bank
b) Gold ornaments
c) Immovable properties mortgaged in the name of the Banks in Sub – Registrar office.
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4. The maximum limit of overdraft may be fixed by the Board at 65% of valuation of the properties made by the authorised Engineer of the Bank, subject to the directives issued by the RBI from time to time.
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5. As the Overdraft and Cash Credit on Hypothication of goods are advanced for working capital needs, both credit facilities shall not be sanctioned to the same person.
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6. Transactions to the overdraft amount may be made preferably through cheques/transfer.
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7. The application for overdraft loan may be made in the form prescribed by the Bank along with the copies/originals of the following documents.
a) VAT, Commercial Tax Registration certificate.
b) Balance Sheet, and Profit & Loss Account duly certified by the Chartered Accountant.
c) Partnership Deed (Registered) in case of partnership firm.
d) Assessment order of Income Tax and VAT.
e) PAN Card.
f) Annual Turnover of the business/industry certified by the CA.
g) Certificate of income source of the borrower.
h) Court Affidavit on the Stamp of Rs.100/- being the agreement of all partners for availing the overdraft loan.
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8. In Case the borrower is a company the following are to be submitted with loan application
i) Certificate Incorporation
ii) Memorandum of Association
iii) Articles of Association
iv) A Copy of Board Resolution
v) Power of Attorney
vi) PAN Card and any other document required under the companies Act 1956
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9. In case an immovable property is provided for security of Overdraft the following necessary documents are to be submitted
i) If the property is owned property, the original title deed.
ii) If the property is ancestral, the details how the property is acquired by the borrower are to be produced.
iii) Property Extract
iv) Valuation Report of the property duly certified the authorised Civil Engineer of the Bank.
v) Encumbrance certificate for 15 years.
vi) Certificate of No. dues of tax issued by the local self Government- CMC/TMC/VPC
vii) Legal opinion issued by Advocate authorised by the Bank.
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10. The maximum of period of overdraft loan shall be 12 months and may be renewed subject to the satisfactory performance of the account by the borrower. In case the transactions of overdraft loan are not satisfactory, the Bank is empowered to recover the dues immediately.
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11. The Rate of interest to be charged is to be decided by the Board subject to the directives issued by the RBI from time to time.
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12. Interest will be charged as per RBI directives and debited to the account if sufficient balance maintained in account.
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13. Penal interest at 2 % over and above the interest rate is to be charged in case the account becomes overdue.
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14. The limit of overdraft to be sanctioned will fixed as follows.
i) 65% of the valuation of the property
ii)75 % to 80% of amount of term deposits kept with the Bank
iii) 80% of the valuation of Gold ornament to be decided by the Board.
(Provided the limit of Overdraft shall not excess 20 % of Annual Turnover)
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15. The sureties are also responsible for timely repayment of principal/interest/any other dues to the Bank. In case death of principal debtor, his descendants, sureties or their descendants are responsible for repayment of dues.
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16. The Board of Directors is competent authority to amend these rules, subject to the directives issued by the RBI from time to time.
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17. A certificate of no dues with other banks/ financial institutions is to be submitted
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18. As per these rules the borrowers should perform their transaction in the overdraft account, four times of the limit sanctioned.
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