Formula for passing cc by banks
This query is : Resolved
Vijay Kr. Mishra
(Querist)
10 November 2009
On which formula Banks are passing Cash Credit (CC), if CC is required Rs. 10 Lakhs ?
Guest
Guest
(Expert)
10 November 2009
Based on Project report that you have submitted.
CA SANJAY MUKHERJEE
(Expert)
10 November 2009
Hi Vijay,
CC is meant to meet the borrowers working capita gap. So this is based on the computation of working capital requirement, i.e. Current Assets - Current Liabilities.
Then Bank calculates the Maximum permissible Bank Finance on the basis of Margin Amount to be paid or sourced by the borrower.
Another approach is a 20% of Turnover can be considered as working capital requirement. So turnover must be > 50 laks for a 10 laks cc limit beside the Working capital computation by CA-CL formula.
Another approach is a 20% of Turnover can be considered as working capital requirement. So turnover must be > 50 laks for a 10 laks cc limit beside the Working capital computation by CA-CL formula.
CC is meant to meet the borrowers working capita gap. So this is based on the computation of working capital requirement, i.e. Current Assets - Current Liabilities.
Then Bank calculates the Maximum permissible Bank Finance on the basis of Margin Amount to be paid or sourced by the borrower.
Another approach is a 20% of Turnover can be considered as working capital requirement. So turnover must be > 50 laks for a 10 laks cc limit beside the Working capital computation by CA-CL formula.
Another approach is a 20% of Turnover can be considered as working capital requirement. So turnover must be > 50 laks for a 10 laks cc limit beside the Working capital computation by CA-CL formula.
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