Line of Credit Interest Rates in India (2025): How Much Do Banks Charge?

If you have ever struggled with a cash-flow gap in your business or household budget, you have probably wished for a credit option you can tap only when needed. That is exactly where a line of credit interest rate matters for Indian borrowers in 2025: you get a flexible limit from a bank or NBFC and pay interest only on what you actually use, not on the full sanctioned amount.

Across Indian lenders, lines of credit usually appear as overdraft accounts, flexi personal loans, working-capital limits, or loan-against-property overdrafts. Names differ, but the structure is similar: a sanctioned limit, flexible withdrawals, and interest on utilisation. Understanding how your line of credit interest rate is set helps you decide whether to treat an LOC as a short-term backup or a long-term funding tool.

What is a Line of Credit in the Indian Context?

A line of credit is a revolving borrowing facility. The lender sanctions a limit – say ₹5 lakh – and you can withdraw, repay, and withdraw again within that limit during the agreed tenure. Interest is normally charged only on the used amount, calculated on a daily or monthly reducing balance.

For most Indian borrowers, this structure appears in practice as an overdraft on a salary or current account, a flexi personal loan, or a property-backed working-capital limit.

Current Line of Credit Pricing in India (2025):

There is no single nationwide line of credit interest rate in 2025. Instead, banks and NBFCs publish broad ranges depending on whether the facility is secured, what benchmark it is linked to and how strong the borrower’s profile is.

Recent rate sheets and marketplace data for overdraft and flexi facilities show patterns broadly like this:

Table 1: Typical Line of Credit Interest Ranges in India (2025)

​These are indicative 2025 bands based on public card-rates and aggregator data. Your own line of credit interest rate will sit somewhere inside these ranges, depending on your CIBIL score, income, collateral, and lender relationship.

Market data shows, for instance, that loan-against-property products – a common base for secured LOCs – often start near 8.5–9% p.a., while unsecured personal and flexi loans usually sit higher in the low-teens to mid-20s.

Secured vs Unsecured Line Of Credit: What Do You Really Pay?

Secured line of credit:

In a secured LOC, you typically pledge residential or commercial property, gold, or other assets. Because the lender has collateral to fall back on, the quoted line of credit interest rate tends to be closer to home loan or LAP pricing than to credit card APRs.

• Typical secured LOC range in 2025: Roughly 8.5%–13.5% p.a. for strong profiles
• Better rates are available when the loan-to-value is conservative, the property is in a prime area, and the repayment capacity is clearly documented.

Public and private lenders offering loan-against-property in overdraft or drop-line formats often advertise card-rates between about 8% and 12–13% p.a. for salaried borrowers with robust credit histories.

Unsecured line of credit:

When you do not pledge any collateral, the lender prices in a higher risk. That is why an unsecured facility usually carries a higher line of credit interest rate, even though it may still be cheaper than revolving big balances on a credit card.

• Typical unsecured LOC range in 2025: Around 11%–24% p.a., in the mainstream segment, stretching above 30% p.a. for riskier or fully digital NBFC products
• Large NBFCs marketing flexi personal loans commonly quote bands like 10%– 31% p.a., with additional charges for certain flexi features.

Bank and NBFC Comparison: LOC-Oriented Products

Many Indian lenders do not use the exact phrase “line of credit” in their brochures, but overdrafts, flexi personal loans, and property-backed drop-lines all behave like the same underlying structure. The table below gives an interest-focused view to help you benchmark any line of credit interest rate offer you receive.

Table 2: Sample Banks/NBFCs and Their LOC-Style Products (Indicative 2025 Ranges)

​Why Do Line of Credit Rates Vary So Much?

Even within the same bank, two borrowers can see very different pricing. Key variables that influence your LOC interest cost include:

• Security and LTV – Secured lines with low loan-to-value get sharper pricing than high-LTV or unsecured limits.
• Credit score and repayment history – A CIBIL score above ~750 and a clean track record strengthen your case; past delays or heavy card usage push pricing up.
• Income stability and employer profile – Stable salaried income with reputed employers is often rewarded with better spreads than volatile cash-flow profiles.
• Product type and ticket size – Small, short-tenure digital lines are costly to run, so they usually carry higher rates than large secured LAP-overdrafts.

All of these work together: a strong profile on several of these factors can pull your line of credit interest rate towards the lower edge of the published band, while weaknesses push it higher.

Fixed vs Floating LOC Interest in India

Most mainstream LOCs in India today are on floating or semi-floating structures, pegged to a benchmark such as the repo rate plus a spread and reset periodically as per bank policy. Fixed-rate LOCs are more common in short-tenure digital products where the lender commits to one price for a limited period, while longer-tenure lines typically remain floating so lenders can adjust to changes in the rate cycle.

How to Compare Line of Credit Offers Smartly?

Before you accept any offer, go beyond the headline line of credit interest rate and calculate the full cost of borrowing:

• Check the APR, processing fees, annual maintenance charges, usage fees, and foreclosure rules.
• Understand how interest is calculated – on daily reducing balances, on the full limit, or only on withdrawals.
• Look at the flexibility. Can you park surplus funds and bring down interest, as with a classic overdraft?
• Always compare at least three to four bank and NBFC proposals for a similar limit and tenure instead of signing the first approval you receive.

Approaching the market this way helps you treat the line of credit interest rate as one part of your decision, alongside product features and service quality.

How My Mudra Helps You Find a Better LOC Deal?

My Mudra works as a channel partner that connects you with regulated banks and NBFCs rather than promoting a single in-house product. Building on the same comparison-led approach used in other My Mudra articles, you can:

• Share basic details once and see curated overdraft, flexi personal loan, and loan against property options that match your profile.
• Compare indicative line of credit interest rate bands, fees, and product structures (secured vs unsecured) across multiple partners on a single screen.
• Get support with documentation, eligibility checks, and understanding fine print like reset clauses, usage rules, and prepayment charges.

If you are considering a working-capital overdraft for your business, a property-backed Line of Credit for expansion, or a more flexible alternative to a standard personal loan, My Mudra helps you shortlist credible, RBI-regulated lenders and choose a structure that fits your cash-flow pattern.

Summing Up:

In 2025, India’s LOC market sits between traditional bank overdrafts and fast-moving digital credit lines from NBFCs and fintech platforms. Secured facilities backed by property or other assets can start below 9–10% p.a. for strong profiles. At the same time, unsecured flexi personal lines often range from the low-teens into the mid-20s and above for higher-risk customers.

The right choice for you is not just about chasing the absolute lowest line of credit interest rate. It is about deciding how much flexibility you need, whether you are comfortable pledging security, and how your income and business cash flows behave through the year. With My Mudra’s help, you can compare offers transparently, understand trade-offs clearly, and commit to a credit line you can manage confidently over the full tenure.

Also Read:
- What is a Line of Credit?
- Difference Between Line of Credit, Credit Card & Loan