What is the exact difference between Overdraft facility and Cash Credit facility?
CA Vitrag S Modi (Chartered Accountant) (186 Points)
28 May 2010What is the exact difference between Overdraft facility and Cash Credit facility?
Lakshmi
(Student)
(1836 Points)
Replied 29 May 2010
Overdraft facility is normally against the fixed deposit . It will have repayment schedule also.
In case of cash credit facility , the facility will normally be against stock or goods in transit.
In case of export orders overdraft facility is also granted against orders also.
aman kumar
(CA final intern)
(47 Points)
Replied 04 June 2010
overdraft facility allows an account holder to withdraw in excess of the account balance maintained by the account holder. This can be seen as a the ground of overdraft facility.
Cash credit makes a provision for credit by transferring the sanctioned amount of loan into an account, from wich the borrower can withdraw as per his conveniance.
You can distinguishe between the two on several other grounds, but this remains fundamental of all.
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