Cc of rs. 10 lacs

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

26 July 2012 Dear Sir

I have been asked by one of my clients to get a cash credit of Rs. 10 lacs sanctioned. He holds Fixed deposit reciepts of Rs. 10 lacs in Union Bank of India.

I have never done work on loan assignments. Please guide.

Amol S Joglekar

Amol S Joglekar (Expert)
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26 July 2012 For cumulative FD, 90% is sanctioned as loan, but for non cumulative upto 80% is sanctioned. So for a deposit of 10L, you will get the loan accordingly.

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Querist : Anonymous

Querist : Anonymous (Querist)

27 July 2012 Thank you Sir. Another question is that Can a CC account be opened in any bank or the bank specifically in which the client holds te aforesaid FD. Please explain.

Aashok Kumar Sharma online

Aashok Kumar Sharma online

(Expert)
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18 July 2024 A Cash Credit (CC) account is typically linked to the financial relationship between a borrower (client) and a bank. Here's how it generally works:

1. **Bank Selection:**
- A CC account can be opened in any bank where the borrower has a satisfactory relationship and where the bank is willing to extend a CC facility based on the borrower's creditworthiness and financial standing.
- It is not mandatory for the borrower to open a CC account in the same bank where they hold a Fixed Deposit (FD) or any other specific account. However, having existing relationships and accounts with a bank can sometimes facilitate the process of obtaining a CC limit.

2. **CC Facility and Security:**
- When a borrower applies for a CC facility, the bank assesses the borrower's financial health, credit history, repayment capacity, and collateral (if required).
- Banks may require security or collateral against the CC facility, such as FDs, stocks, property, etc., depending on the amount of the CC limit requested and the bank's policies.

3. **Collateral and FD Linkage:**
- If the borrower offers FDs as collateral, the bank may consider these deposits to mitigate its risk in extending the CC facility. However, the FDs themselves do not necessarily determine which bank the CC account must be opened in.
- The bank may ask the borrower to pledge the FDs or provide them as security, but the CC account can be operational in any bank where both parties agree and where the bank is willing to extend the facility.

4. **Operational Considerations:**
- Once the CC account is approved and operational, the borrower can draw funds as per the sanctioned limit and requirements. The interest is charged only on the amount utilized from the CC limit.
- Repayments or adjustments are made periodically based on the terms agreed upon between the borrower and the bank.

### Conclusion:
In summary, while a Fixed Deposit (FD) can be used as collateral or security against a Cash Credit (CC) facility, the CC account itself can be opened in any bank where the borrower and the bank agree to the terms. It is not mandatory to open the CC account in the same bank where the FD is held, although the FD may be used to secure the CC facility. The decision ultimately depends on the borrower's relationship with the bank, terms offered, and mutual agreement between the parties involved.

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