CASH CREDIT LIMIT

Depends on your stock statement

Depending on your stock and receivables. There are two aspects that determine your withdrawal limit.
One is credit limit and second is DP (Drawing Power) which is on your stock and debtors figure you submit.
Drawing power will be calculated keeping certain margin % on stocks and debtors depending on banks. It very from Raw Materials, SIP and FG. Also for DP calculations outstanding for more than 90days is mostly not considered.

You can withdraw upto the amount as per credit limit sanctioned or DP whichever is less.

Hello Friends,

I have 20 lakh sanctioned OD but bank has never gave 20 lahs they always blocked 2 lakhs on the basis of DP calulation. My Stocj and DEbtors will be as follows.

Particulars	Amount
Stock	₹56,58,795
Eligible debtors (0–90 days)	₹33,78,229
Total stock and debtors	₹90,37,024
Less: Creditors	₹2,12,728
Net amount before margin	₹88,24,296

I don't understand on what basis bank is blocking my 2lakhs, please suggest.

 

@ Gaurollus — on your figures, even with typical margins (25% on stock, 40% on debtors) DP works out to about ₹61 lakh, far above your ₹20 lakh limit, so DP is not the reason; a ₹2 lakh hold is usually a lien for a sanction condition (e.g., retention), an expired stock audit/insurance, or an overdue stock statement — ask the branch for the lien reason in writing.