what is bank occ a/c

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PRAMOD PANDIT M.COM , CA FINAL

PRAMOD PANDIT M.COM , CA FINAL (Querist)
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10 November 2009 what is bank occ a/c ?

Ram Avtar Singh

Ram Avtar Singh (Expert)
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10 November 2009 Bank OCC-Open Cash Credit
Bank Od-Over draft
Both are loan accounts
Always Bank OCC or OD accounts shows Credit Balance
Bank current account will always show Debit Balance
You will come across Interest on loan account in Loan account and where as you will not find such entry

in other words

OD - An overdraft occurs when withdrawals from a bank account exceed the available balance which gives the account a negative balance - a person can be said to have gone "overdrawn".

If there is a prior agreement with the account provider for an overdraft protection plan, and the amount overdrawn is within this authorised overdraft, then interest is normally charged at the agreed rate. If the balance exceeds the agreed terms, then fees may be charged and higher interest rate might apply.

Ram Avtar Singh

Ram Avtar Singh (Expert)
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10 November 2009 OPEN CASH CREDIT (OCC)

A running credit facility to SME entrepreneurs against stocks and receivables.

Purpose
For working capital needs of SSI units.

Assessment Of Limit
Depending on the working capital requirement of the unit assessed as per turnover method/MPBF System/Cash Budget System.

Drawings from the account shall be against Drawing limit arrived based on stocks such as raw materials, work-in-process, finished goods and receivables.

Wherever required, Overdraft against Book debts (ODBD) is also permitted against book debts of specific age arising out of genuine trade transactions with Govt./Public Sector Undertakings/Joint Stock Companies/firms of repute.

Security
Prime security - Stocks, receivables.

Collateral security - Land and building, plant and machinery plus personal guarantee shall be obtained whenever applicable.

Repayment
Since the limit is permitted as running limit, the limit is renewable every year subject to review.

Guarantee Cover
Cover under Credit Guarantee Fund for Small Industries (CGFSI) (in case the aggregate credit facility permitted is upto Rs. 25 lakhs).

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