When you have an Overdraft (OD) loan from Union Bank of India, the bank requires you to submit a monthly stock statement. This is needed because your OD limit is based on your stock value (DP-based). The stock statement should include details about the quantity, value, and type of goods you hold.

Minimum Stock Requirement: The bank might also ask you to maintain a minimum level of stock, which is calculated based on your loan’s drawing power (DP). If your stock falls below this level, the bank could reduce your loan limit or ask for repayment.

More Details on the Stock Statement Procedure and Minimum Stock Requirement:

1. Stock Statement Procedure:
   Each month, you are required to submit a stock statement to the bank. This statement provides information about the total value and quantity of the stock you currently hold. The purpose is to ensure that the stock is sufficient to support the overdraft loan limit you’ve been granted.

2. DP (Drawing Power)-Based Loan:
   The OD limit you receive is based on the DP (Drawing Power), which is a percentage of the total value of your stock. For example, if your stock is valued at Rs. 40 lakhs and your DP is 70%, the bank will allow you to borrow Rs. 28 lakhs. If your stock value drops, the OD limit may be reduced accordingly. if your OD limit is 40 lakhs then your stock may be somewhere more than 58 lakhs (i.e 40/70%). If your stock value drops, the OD limit may be reduced accordingly.

3. Minimum Stock Requirement:
   The bank may set a minimum stock value that you need to maintain. This ensures that there’s always enough stock available to cover the overdraft loan. If your stock falls below this minimum, the bank could take action, like reducing your OD limit or requesting early repayment.

By submitting monthly stock statements and keeping the stock value within the required limits, you maintain your overdraft facility and avoid any complications with the bank.

1. Stock Statement Procedure for OD Loan (Union Bank of India):

The procedure for submitting a monthly stock statement to Union Bank of India when you have an OD loan is as follows:

• Monthly Submission: You must submit a stock statement to the bank every month. This statement includes the details of the stock you currently hold, such as quantity, value, and description of goods.

• DP-Based Calculation: The loan amount you can borrow is based on the DP (Drawing Power), which is a percentage of the value of your stock. The stock statement helps the bank calculate whether your available stock is sufficient to cover the overdraft.

• Submission Format: The stock statement is usually provided in a prescribed format. The bank might require supporting documents like invoices or purchase receipts to verify the stock's value.

• Reporting Frequency: You must submit the stock statement by the due date every month, as per the terms of the loan agreement.

2. Minimum Stock Requirement for Monthly Stock Statement (OD Loan):

Union Bank of India may also require you to maintain a minimum stock value for your overdraft facility. Here's what you need to know:

• Minimum Stock Levels: The bank sets a minimum stock level to ensure there’s always enough collateral to back the loan. If your stock value falls below this minimum threshold, the bank may reduce your OD limit or ask you to repay part of the loan.

• Impact on Loan Limit: If the stock you hold is below the minimum required level, your DP (Drawing Power) could be reduced, leading to a reduction in the maximum loan you can draw.Generally bank keep OD limit less than 70% of stock value. Hence for 60 lakhs of stocks , you may get od upto 42 lakhs

• Compliance: You need to ensure that the stock statement reflects the required minimum stock level. If your stock falls short, it’s important to address the issue immediately to avoid loan restrictions.