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Cash Credit

In: Business and Management

Submitted By murthybanagar
Words 418
Pages 2
Cash Credit : Overviews
Cash Credit is also known as Working Capital .Cash Credit is a facility to withdraw the amount from the business account even though the account may not have enough credit balance. The limit of the amount that can be withdrawn is sanctioned by the bank based on the business cycle of the client and the working capital gap and the drawing power of the client. This drawing power is determined, based on the stock and book debts statements submitted by the borrower at monthly intervals against the security by hypothecating of stock of commodities and/ or book debts.
The excess withdrawal of cash is made generally on demand from the customer and the customer has to pay interest on the excess amount he/she has withdrawn. The Cash Credit facility is quite useful to those businesses where cash payment like wages, transportation,cash purchases are to be made and the receivables are not realized in time.
Cash Credit : Process
The following are the sequence of steps taken by the banks on receipt of completed application forms.
1. Application form is accepted and acknowledged.
2. Personal interview /discussions is held with the customers by the bank’s officials.
3. Bank's Field Investigation team visits the business place/work place of the applicant.
(All the documents submitted are verified by the bank with the originals so as to ensure the authenticity of the same.)
4. Bank verifies the track record of the applicant with the common information sharing bureau (CIBIL).
5. In case of fresh projects the bank analyses the back ground of the applicant/firm/company and the Technical feasibility/financial viability of the project based on various parameters and also the existing market conditions.
6. Depending on the size of the project the file is put up for sanction to the appropriate level of authority.
SANCTION AND DISBURSEMENT :
1. On...

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