Cash Credit Limit

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This query is : Resolved

seema singla (Querist)

14 March 2009 A Pvt. Ltd. Co. has three C/C Limits. All these are to be shown in the final balance sheet. Is there going to be any problem due to more than one C/C Limit? If yes, please tell about that.
Further, If the company increases its C/c Limit, then it has to modify the charge already created or nothing is to be done with regard to increase in C/C Limit.
Please guide me as it is very urgent.

CA Tilak Raj Sharma

CA Tilak Raj Sharma (Expert)

14 March 2009 There is no problem with the more than One CC Limits.

Bhaskaran Chackrapani Warrier

Bhaskaran Chackrapani Warrier (Expert)

14 March 2009 If the three limits are on the same assets with different bankers,according to me, it is not a healthy practice of the company. If the situation is so the auditors has to comment upon that in the notes as well as in the audit report.
In situations other than what is mentioned above I don't see any harm in having three c/c limits.
Second para of the query is o.k.

seema singla

seema singla (Querist)

14 March 2009 Thanks for the answer sir.
The reply of the IInd part of the query is not clear i.e. in an increase in C/C Limit, one has to modify the charge or not. Please reply again.
Thanks a lot

Bhaskaran Chackrapani Warrier

Bhaskaran Chackrapani Warrier (Expert)

14 March 2009 Yes. Charge is to be modified.

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