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About this template
What is this template?
This document is a formal credit agreement between a bank and a business owner for a revolving overdraft facility. It contains a specific clause for a property mortgage as security and a provision for interest on a minimum balance even if the facility is not utilized. It is not an unsecured personal loan or a simple promissory note.
When should you use it?
Use this when a business owner requires a secured cash credit line from a bank and is prepared to mortgage real estate as collateral. Use a General Security Agreement or a standard Promissory Note if the loan is not linked to an overdraft facility or a property mortgage.
What's inside
| Clause | Name | What it does |
|---|---|---|
| 1 | Loan Limit | The Bank provides overdraft facilities up to a maximum limit of Rupees [amount] including all interest and charges. |
| 2 | Interest and Monthly Debits | The Borrower pays interest on daily balances debited monthly, including a minimum interest charge on a specified amount if the limit is unused. |
| 3 | Incidental and Service Charges | The Borrower must pay incidental charges every [number] months alongside commissions for outstation cheques and drafts. |
| 4 | Security and Mortgage | The Borrower mortgages the property at [address] and provides a personal guarantee to secure the cash credit account. |
| 5 | Duration and Renewal | The agreement is enforceable for one year, requiring a renewal application one month before the termination date. |
| 6 | Repayment on Demand | The Bank may demand the outstanding balance at any time, using its own books as conclusive evidence of the amount due. |
Who it's for
- a sole proprietor seeking a cash credit facility from a commercial bank in India
- a borrower mortgaging a specific numbered property to secure an overdraft
- a business requiring flexible capital against trade where the bank demands monthly interest debits
How long it runs and how it's signed
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