Drawing power

This query is : Resolved 

Querist : Anonymous (Querist) 03 October 2012


please tell me what is Drawing Power &how to calculate it ,its very urgent.

please explain me with an example ,I can't understand it .its very urgent

Amol S Joglekar (Expert)
03 October 2012

the term is used in banking industry with respect to cash credit limit. Think from banker's view point. Get the sanction letter from the bank. It will give you your margin requirements. (Say 25%) So 75% of NET working capital is called as drawing power. This is supposed to be calculated by the banks on month on month basis for all the cash credit account.

CA Lokesh Pokharna (Expert)
03 October 2012

DP is value assessed less margin

DP amount can be withdraw at any time subject to T & C of contract.

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