How it works?

The cash credit account functions like a current account with cheque book facility. The facility is provided to pledge or hypothecation of stock i.e. raw materials, work in progress, finished goods, etc. or on the guarantee of book debts (debtors) or other collateral security as per banking company norms.

The withdrawing facility provided by the bank in which the person can withdraw amount more than what he holds to his credit, against the hypothecation of stock or any other collateral securitY.

For availing cash credit facility, the borrower must have a cash credit account with the bank.

Cash Credit (CC) is granted against hypothecation of stock and assets such as raw materials, work-in-process, finished goods and stock-in-trade, including stores and spares.

Features of Cash Credit

This loan is given to meet the working capital requirements of a business.

It is given against a collateral security.

This loan is given to meet the working capital requirements of a business.

Interest is generally charged only on the amount of loan taken by the customer and not on the amount of credit   sanctioned.

This is a short-term loan with specified monthly/quarterly repayment structure as decided by the lender.

The applicant is allowed to withdraw the funds made available to him to meet the day to day working capital   requirement by way of a running account.

A cheque book is issued in the name of the company and he can withdraw funds as per requirement

The applicant has the option to repay the loan as frequently as desired (daily/weekly), or as per the repayment, the   structure is drawn by the lender.

Even individual applicants can avail this type of facility against their fixed deposits (as a loan) and save on interest.