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Cash credit account

Nithin Chettoor (Assistant Manager) (388 Points)

17 February 2010

Hey guys,

I hav a doubt on cash credit acoc*nt. Whats the nature of the same. Is it always secured? Will it ever have a debit balance or always credit balance? How different is it from a Bank O/d facility? And the disclosure of the same in companies accounts as per Sch VI. Will it be grouped in secured loans? Or will it ever be disclosed in Cash and Bank? If its not secured, will it be in current liability or unsecured loan?

Thanks in advance folks

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2 Replies

Pavan Daga (business) (125 Points)
Replied 17 February 2010

Dear Nithin,

Cash Credit is a secured / Unsecured loan given by banks, for working capital purpose.

it can have both Credit & Debit balances, when you need funds you can draw upto the limit available & can even deposit excess cash, the interest is charged based on the outstanding on each day.

Bank O/d facility is classifed as Current Liabilities. OD can be temporary in nature and also unsecured.

Yes, Cash Credit will be grouped under the Secured Loans in Schedule VI. Even if the Cash Credit limit sanctioned is Unsecured it will reflect in Unsecured Loans in Sch VI.