Federal Bank - 8.50% for Banking Services - MSME & SME (OD/CC) Loan
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Last updated: 19 Sep 2025, 01:48 PM
Federal Bank MSME & SME Overdraft (OD)/Cash Credit (CC) Loan: Flexible Funding for Business Growth
Federal Bank Limited, a leading private sector bank headquartered in Aluva, Kerala, offers tailored Overdraft (OD) and Cash Credit (CC) facilities under its SME and MSME business loans portfolio. These revolving credit lines provide working capital support for Micro, Small, and Medium Enterprises (MSMEs/SMEs), enabling withdrawals up to a sanctioned limit with interest only on the utilized amount—perfect for managing inventory, receivables, payroll, or seasonal demands.
In-Depth Details
Key Highlights
- Products Offered:
- Working Capital Finance (OD/CC): Secured or collateral-free options for procurement of stock, financing against receivables, and advertisement expenses; includes composite facilities like OD, CC, Term Loans, Demand Loans, Bank Guarantees, and Letters of Credit.
- Special Schemes: Federal Goldsmiths Loan Scheme, Loan against Rent Receivables/Property, and CGTMSE-backed collateral-free credit for micro/small units; integrated with government programs like PMMY and Credit Guarantee Scheme for MSEs (up to ₹10 crore coverage as of April 2025).
- Loan Amount: ₹50,000 to ₹5 crore (collateral-free up to ₹2 crore under CGTMSE); higher limits (up to ₹25 crore) for secured SME facilities based on turnover and financials.
- Tenure: Revolving (1-3 years, renewable annually); flexible repayment aligned with cash flows; moratorium up to 6 months for eligible units.
- Interest Rates (as of September 2025): Linked to Repo Rate (5.50%) + spread; starting from 8.50% p.a. for MSMEs (up to 11-18% based on risk profile, credit score, and collateral); concessions of 0.25-1% for women-led, priority sector, or high-rated borrowers; effective rates as low as 7% p.a. under select schemes.
- Eligibility Criteria:
- Business vintage: Minimum 1-3 years.
- Annual turnover: ₹10 lakh to ₹250 crore (MSME classification via Udyam Registration: Micro <₹5 crore investment/turnover, Small <₹50 crore, Medium <₹250 crore).
- Credit score: CIBIL 700+ preferred; positive cash flow and Udyam certificate mandatory.
- Sectors: Manufacturing, trading, services (excluding speculation); priority for SC/ST, women entrepreneurs, and rural units.
- Collateral: Optional (CGTMSE guarantees 75-85% for loans up to ₹2 crore); accepts property, gold, or liquid securities.
- Features & Benefits:
- Interest charged only on drawn amount for cost efficiency.
- Quick drawdown via cheques, ECS, or digital platforms.
- Digital application and tracking via MSME Portal for faster turnaround (15-30 days).
- No processing fees for loans <₹1 lakh; collateral-free options reduce upfront costs.
- Additional perks: Integration with GSTN for invoice financing, forex support, and revival/rehabilitation loans for stressed units.
- Required Documents:
- KYC: PAN, Aadhaar, address proof.
- Business: Udyam Registration, GST returns/ITR (last 2 years), profit & loss statements.
- Financials: Bank statements (6-12 months), projected cash flows.
- Collateral (if applicable): Property/gold valuation documents.
- Application Process: Apply online via Federal Bank's MSME Portal (federalbank.co.in/msme-portal) or branches: Submit form/docs digitally, get pre-approval in 7 days, full sanction in 15-30 days post-verification; track status online.
