Financial Updates19 Jun 2019
|Bank Name||Key Features|
Fore closure charge
A cash credit comes with a borrowing limit determined by the drawing power of the borrower. A company can withdraw funds up to the borrowing limit.
In contrast with other traditional debt financing methods such as loans, the interest charged is only on the running balance of the cash credit account and not on the borrowing limit.
The short-term loan comes with a minimum charge from the loan amount regardless of whether the borrower is able to utilize it. For example, banks typically include a clause that requires the borrower to pay a minimum interest on a predetermined amount or the amount withdrawn, whichever is higher.
It is typically given for a maximum period of 12 months, after which the drawing power is re-evaluated.
A Cash Credit (CC) is a short-term source of financing for a company. In other words, a cash credit is a short term loan extended to a company by a bank. It allows a company to withdraw money from a bank account without keeping a credit balance but is only limited to borrow up to the borrowing limit.
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