Drawing power

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RAJAGOPAL (Querist)
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20 November 2011 I WOULD LIKE TO KNOW THAT WHAT IS THE MEANING OF DRAWING POWER & HOW IT IS DIFFERENT FROM SANCTIONED LIMIT FOR A OD/CC ACCOUNT?

Ram Avtar Singh

Ram Avtar Singh (Expert)
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20 November 2011 Basicly a company takes loan from bank by hypothicated his stock & debtor up to 90 days,

Drawing power calculated on
(stock+debtors up to 90 days+margine money)-(creditors+Buyers credit)and less 25% margine = Drawing power.

if he will issue cheque after D.P. banks can stop payment. if DP is excess then you can issue cheques to your vendor up to loan suctioned limit.

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