Ex-Banker Advisory Ahmedabad, Gujarat
+91 9664500277 smecfoservices@gmail.com
Revolving Credit Lines

Cash Credit (CC) / Overdraft (OD)

Flexible revolving credit limits that allow businesses to draw, repay, and redraw operational funds as needed with interest computed only on the utilized balance.

Limit Range
₹20 Lakhs – ₹30 Crore
Interest Pricing
Interest on Utilized DP
Collateral Options
Stock, Debtors or Property
Facility Validity
Annual Renewable Line

Understanding Cash Credit & Overdraft Limits

Revolving credit facilities like Cash Credit (CC) and Overdraft (OD) are the backbone of SME operational liquidity. Rather than paying fixed monthly installments on a term loan, businesses maintain an operating account that allows daily cash deposits and withdrawals up to the sanctioned limit.

Comparing CC and OD

Parameter Cash Credit (CC) Overdraft (OD)
Primary Asset Inventory and Book Debts Property, FDs, or Liquid Assets
Drawing Power (DP) Linked to monthly stock statement Fixed up to sanctioned collateral limit
Best Suited For Trading & Manufacturing firms Service businesses & asset owners
Interest Basis Daily closing utilized balance Daily closing utilized balance

Key Features & Advisory Focus

  • Interest Efficiency: Surplus receipts immediately reduce the debit balance, saving interest expenses.
  • Drawing Power Optimization: Structuring debt and debtor aging parameters correctly to ensure full facility availability.
  • Renewal Preparation: Preparing audited CMA data and projected balance sheets for annual bank reviews.

Frequently Asked Questions

Interest is calculated on the daily outstanding debit balance in the account at the end of each day, rather than the entire sanctioned limit. If you do not utilize the limit, no interest is charged on the unutilized amount.

Cash Credit is secured primarily against stock and receivables, requiring monthly stock statements for Drawing Power validation. Overdraft is generally backed by immovable property, fixed deposits, or financial securities without needing monthly stock verification.

Limits are usually reviewed and renewed annually based on audited financial performance, GST turnover consistency, and healthy account conduct over the preceding 12 months.

Related Services

Working Capital Limits Cash Credit / OD CGTMSE Scheme Unsecured Business Loans Loan Against Property
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