wht is difference btween cash credit and overdraft
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OD temporary to adj few days gap of cash flow,whereas Cash credit based on the evaluation of working capital requirements by unit,and normally pre sanctioned as per norms.
OD temporary to adj few days gap of cash flow,whereas Cash credit based on the evaluation of working capital requirements by unit,and normally pre sanctioned as per norms.
OD is temporary loan from bank which is increase ur current liabilities and cash credit means reduced in ur current assets
Major difference is due to the requirement of security/ collateral against loan. Cash credit is secured by hypothecation of existing current assets the company whereas bank OD is generally unsecured. Bank OD is extended to entities having good creditworthiness in the market.
VARUN SIR'S ANSWER CLEARLY POINTS OUT THE DIFFERENCE
Cash credits are agianst the hypotecation of stock and debtors and over draft may be secured or unsecured . The unsecured overdraft is the sanction to overdrawn the account without any security except the personal security and credit worthyness of the borrower. In case of secured overdraft , the borrowed money is secured against FDR, NSC etc.
- ca sudhir halakhandi
thanks for good clarification
ok thanks for answering frnds but wht abt int and opening of a/c?like od cab be overdrawn and in case of cash credit wht is procedure?
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