March 7, 2024

Overdraft (OD) is a credit facility in which the money can be withdrawn from the current or savings account, even if the account balance is zero or even below. Overdraft facility is a type of extension of the credit limit offered by the banks. The sanctioned limit is said to be ‘overdrawn’. An authorized Overdraft limit is assigned for each customer depending on their relationship with the Bank. The customer can withdraw money up to the assigned limit. Banks charge interest rates only on the utilized amount from the total sanctioned limit and are renewed every 12 months. What is an Overdraft Facility? An overdraft facility is a financial arrangement between a bank and a customer, that allows the customer to withdraw more money than is currently available in their account. Almost every bank or financial institution in India provides an overdraft facility to its customers. The bank decides the loan amount and interest rate criteria. Let’s learn what an overdraft facility entails and how Terkar Capital simplifies the application process. As the name suggests, the bank gives overdraft facilities to borrowers.  It is to withdraw money more than the balance available in their bank account to overcome working capital requirements. OD is a short-term loan that must be repaid as determined by the bank. It can be available even if the account balance is zero. Such a facility is available in both secured and unsecured ways. The borrower can be individuals, self-employed professionals, etc. OD Facility Example- To effectively manage your money, it is critical to understand the concept of an overdraft. So, let’s simplify using the example below: PQR Private Ltd, a company with a current account at XYZ Ltd Bank, has a credit balance of Rs 750 Lacs. The company needs to make a payment of Rs 820 Lacs to one of its vendors. After analyzing the expenses, the company realizes that it needs additional cash to make the payment. Hence, the company approaches its banker and applies for an overdraft of up to Rs 850 Lacs. The banker approves the application at a reasonable ROI. Thus, the company can now use the overdraft amount as and when required and will pay interest on the amount used above the credit balance. Overdraft (OD) Terms The terms of a loan may vary depending on the borrower’s profile, repayment capacity, relationship with the banker, financial history etc. Features of OD Facility The overdraft facility helps in the effective working capital management of the company. It solves the immediate cash crunch. Also, It gives flexible repayment options to the current account holders. The credit limit depends upon the relationship of the borrower with his banker and also his credit score. Generally, the credit period is 12 months. Thus, the borrower has to renew the facility according to their requirements. The interest is charged only on the extra amount used. Other than the credit balance of the bank account which varies as per the amount of the Overdraft. The repayment of the OD is not done through EMIs. However, the borrower can pay as and when he is available with cash but before the end of the credit period. Pros & Cons of an Overdraft Facility Advantages Disadvantages Helps in managing business cash flow Higher interest rate Fulfills urgent cash crunch requirements Offered only to bank account holders Interest is paid only on the utilized amount The sanctioned limit depends upon the applicant’s financials Can be withdrawn at short notice Short-term borrowing – revises every year No collateral required by banks Not suitable for long-term finance Types of Overdraft (OD) Banks offer different types of Overdraft accounts that have diverse eligibility criteria, some of those are mentioned below: 1. OD against Salary Salary accounts opened by the businesses for their employees are eligible for this facility. The minimum requirement to avail Overdraft facility in a salary account is to have a regular monthly salary credited by the company and the company should be on the approval list of the bank. Features: Banks offer Overdraft amount up to 3 times the current salary of the customer The facility is offered at minimal documentation and an easy-repay feature Customers are required to pay interest only on the utilized amount with the flexibility to repay the amount anytime without pre-closure charges The minimum salary limit varies from Rs. 15,000 to Rs. 1.25 lakh according to specific banks This type of Overdraft does not require any security or collateral Some banks even offer Overdraft amounts of up to Rs. 4 lakh, depending upon the salary   2. OD on Savings Account Despite being a relatively new concept in the country, Overdraft on saving accounts has become quite popular due to being backed by the government. All the savings accounts opened under Pradhan Mantri Jan Dhan Yojna are eligible for an Overdraft of Rs. 5,000 or 4 times the monthly accent balance (whichever is lower). The accounts must be satisfactorily operated for a period of 6 months to avail this facility and only one member of a family is eligible for it. The facility is granted to the earning member of the family, preferably women. The account must be linked with an Aadhar card. The account holder must have another savings account for compliance with the RBI directive as well. Minors and KCC (Kisan Credit Card) individuals are not eligible for the scheme. There is also a renewal fee associated with the facility. However, the interest rate cannot exceed 2% above the base rate. This facility does not attract any processing fee. Another good example of Overdraft on a saving account is Citibank Suvidha Savings Account. This is a form of instant cash credit that allows you to get instant mocashney up to 5 times of net monthly salary. The bank fixes the minimum EMI amount along with the interest rate. However, the customer can choose to increase the amount of EMI at his/her convenience at any time. This scheme does not include a prepayment fee. 3. OD against Time Deposits

In order to promote the transparency in awarding of petrol pump license and franchise by Oil Marketing Companies, a new dealer selection process has been formulated. Under the new process, the applicant is first checked against pre-established eligibility criteria. All applicants conforming to the eligibility criteria are selected for the next round, wherein lots are drawn or a bidding process is used to select the dealer. Hence, eligibility criteria now play an important role in the determination of the petrol pump dealer. Setting up a petrol pump in India involves a structured process, and obtaining a license is a crucial step in this venture. With the increasing demand for fuel across the country, the petrol pump business presents a lucrative opportunity. However, navigating the licensing procedures is vital for a smooth establishment. To initiate this process, individuals or entities must adhere to the guidelines laid out by the government. The licensing authority, typically the State Level Coordinator of Oil Industry & Petroleum Planning, governs the issuance of petrol pump licenses. The application process encompasses various stages, including eligibility checks, site feasibility assessments, and compliance with safety standards. Basic Requirements For Opening An Indian Petrol Pump To be eligible for a fuel pump license and open a petrol station in India, one must meet specific requirements outlined by Income Tax regulations.  The applicant must be an Indian citizen and a resident of India, having spent at least 182 days in the country during the preceding fiscal year to qualify for the citizen of India certificate.  Additionally, the candidate should fall within the age bracket of 21 to 55.  Note – Supporting documents such as a photocopy of the individual’s birth certificate, secondary school graduation certificate, 10th standard board credential, passport, age document, or an identification card issued by the election commission must be submitted as proof of the individual’s age. What is the minimum education requirement to open a petrol pump in India? All applicants making an application for a petrol pump dealership must have basic education. Rural petrol pump applicants who are SC/ST or OBC must have passed minimum 10th standard and all other applicants must have passed a minimum 10+2 level of examination. In case of an application under an open category, the applicant must have passed a minimum 10+2 level of examination for rural petrol pumps. For open category applicants other than rural areas, the applicant must have an educational qualification from any of the universities under an Act of the Central or State Legislature in India or any other educational institution under an Act of Parliament or to be as Deemed University. Hence, for open category applicants other than rural areas, it requires a Graduation in any field or Chartered Accountant or Company Secretary or Cost Accountant or Diploma in Engineering. What Are the Criteria for Opening a Petrol Pump? The person must be an Indian citizen. The applicant should be a resident of India, meaning they must have stayed in India for more than 182 days in the preceding financial year. The age of the applicant must be between 21 and 58 years. Individuals classified as freedom fighters are not eligible. A valid identification document is mandatory. How Much Money Required for a Petrol Pump License? To obtain a petrol pump license in India, candidates must demonstrate the financial capacity to invest a minimum of Rs. 25 lakhs for a standard petrol pump and Rs. 12 lakhs for a rural petrol pump. Institutional investors can use various methods such as bonds, shares of listed companies in demat form, national savings certificates, deposits with banks, registered companies, postal schemes, shares of mutual funds, and more to meet the investment requirement.  It’s important to note that assets with unproven provenance, such as IOUs and jewellery, will not be considered. Additionally, only 60% of the total value of shares, collective investment schemes, and notes will be considered in the assessment. Additionally, a Chartered Accountant must provide the necessary investment assessment certification for the petrol pump license application. How Much Land Required for Petrol Pump Dealership? Securing land is a crucial step in establishing and operating a petrol pump or gas station. The process involves several factors, and prospective business owners should have a thorough understanding of the complexities involved. When considering a petrol pump dealership, one of the key criteria is land acquisition. Here are the essential factors related to land acquisition: Proximity to the Highway: The land should ideally be located alongside a highway, ensuring easy accessibility for customers. Ownership or Rental Contract: Candidates must either own the land or have a valid rental contract for a suitable property near the proposed site. Formal Offer for Acquisition: Preferential consideration is given to candidates who have a formal offer for acquiring or entering a long-term rental agreement for a suitable piece of land. Documentation: Applicants must provide various documents demonstrating ownership of the property or their intent to acquire the specified piece of land. The size of the land should meet the specified requirements. Property Improvement: If selected for the petrol pump franchise, applicants must enhance the property to street level by appropriate earthwork procedures. This includes creating a concrete structure and a composite wall with a minimum height of 1.5 meters, considering soil conditions. Understanding and fulfilling these criteria are essential steps in the land acquisition process for establishing a petrol pump dealership. FAQs What is the total cost to open a petrol pump? The total cost to open a petrol pump in India can range from Rs. 15-20 lakhs for a new business, depending on the location and type of retail outlet. What is the license fee for petrol pump in India? The license fee for a petrol pump dealership in India ranges from Rs. 18/KL to Rs. 48/KL for motor spirit, depending on the category of the retail outlet. Can I sell petrol without a license? No, it is illegal to sell petrol without a license in India. A petrol pump business requires various licenses

Not open to the public, the interior of an online dark store may appear like those that are found in a conventional market set out with aisles of shelves that contain groceries and other items for sale. However, they are not located in shopping malls or High Streets but in gritty and grim areas where good road connections are present. The building themselves are frequently non-descript and utilitarian from the outside. Inside, the stores dispense with assistants who provide clients with product advice, point of sale displays and check-out counters. After the orders have been processed online, they are sent to the shop floor. These electronically generated orders are then routed and processed according to the store’s layout for optimal picking. Unlike a traditional store where a picker moves around the aisles with a shopping trolley, they stay in a single spot. A mechanized system or goods-to-person pick station sends lower selling products such as spices and cordials from storage along a conveyor belt to the picker. Goods that usually sell fast such as bananas and Coca Cola are placed on shelves in aisles in another portion of the dark store. More than one order can frequently be collected simultaneously. Fulfilled orders are then delivered to customers through the use of a fleet of vans that return throughout the day to be refilled. What is a Dark Store? A Dark Store is a micro-fulfillment center dedicated to rapid online order fulfillment. It is a kind of small, local store but without the customers. It has has aisles with shelves and racks for groceries. When a customer makes an order comes, dark store staff picks and packs the items immediately available in the stock. Then they ship the order directly to the customer’s address or to a convenient collection point specified by the customer. Benefits of the Dark Store Quick Shopping- Dark Stores offers the convenience of online shopping with the benefit of instant delivery of your products. It also helps maintain the safety and social distancing measures during the pandemic. This is why dark stores have created a space for quick and contact-free shopping. Dark Stores allow consumers to purchase from a brick-and-mortar without even entering it. Fast Delivery- The dark store is the best way to provide faster order fulfillments and deliver more efficiently by including a variety of distribution options. It helps bring the products closer to a specific part of the market. Better SKU Management- The main benefit of the Dark Store concept is that it can improve SKU management by focusing on capabilities such as storage and click-and-collect. It is good for a grocery store to have as many SKUs as there are customers. Range of Products- The dark store layout can be planned for more storage and better picking capabilities. Improved storage capacity means better product management, more room for an extensive range of products, and faster order fulfillment. Inventory Control- Dark Store also supports the concept of inventory control in the same geographic region. As these dark stores are kind of warehouses that are customer-free, better inventory control can be managed for larger order volumes. Relevance of Dark Stores After the Pandemic Converting a brick-mortar store into a dark store has been a great way to optimize the supply chain, and improve customer experience. Many retail companies have benefited from the Dark Stores during the pandemic situation. And it is likely that the concept of Dark Stores is not only here to stay but will continue to evolve in the coming years.The pandemic has not only accelerated the shift in consumer behavior but has already pushed a shift from brick-and-mortar stores to online shopping. The concept of Dark Store has changed the way grocery retail brands operate in the market space. Dark Stores will be the best way for improved storage and distribution of products for many brands. The Challenges of Dark Stores Potentially higher transportation costs. If not dropshipping from the closest location, these costs come from the need to provide home delivery from, and transport click-and-collect orders to, the dark store facility. Goods handling costs are sometimes higher as well — especially for retailers who deal in perishables. Taken together, these can offset some of the savings achieved through greater dark store efficiencies. Cannibalization of in-store sales. For many retailers, an online order gained is an in-store sale lost, yet the fixed costs of operating a traditional self-service outlet remain the same. This means that over time, the profitability of a retailer’s brick-and-mortar locations will decline. Increased competition and customer-base erosion. Once consumers become accustomed to buying certain items online, it is very easy for them to switch to an alternative source for their products. Selling points that previously allowed a retailer to hold onto its customer base and control the customer interaction — such as convenient store locations, familiar store layouts and superior customer service — are no longer relevant or play out very differently in the online world. Dark Store Order Fulfillment: How Does It Work? Dark stores improve order fulfillment in several ways, depending on their customers’ preferences and the type of goods or merchandise they provide. The three most common methods are: Ship to customer delivery, which became hugely popular at the start of the pandemic, when people were homebound and online shopping surged. Since then, consumers have become accustomed to the ease and convenience of having their orders delivered to their doorstep and now prefer this way of shopping for many items. Most dark stores provide home delivery; it has become virtually synonymous with the dark store concept. Curbside pickup is also utilized by many dark stores, especially dark supermarkets and others that sell perishable goods — this grew significantly during the pandemic. When this method of fulfillment is employed, the dark store usually provides dedicated parking spaces for customers and a store employee brings the order to the car, so that the person receiving the order doesn’t have to leave the vehicle. This approach is both convenient for consumers and makes it easy for the store to follow customers’ social distancing practices,