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Working Capital Loans

  • Overview

    To manage day to day operational expenses and to align any temporary liquidity mismatch, Corporates can avail themselves of the Cash Credit or Overdraft facility from Axis Bank. Cash Credit is a facility through which the Bank lets the corporate over draw its account over and above the corporate's own funds up to the assessed drawing power.

  • Features & Benefits

    1. Cash credit is a drawing power (DP) based facility available for up to 6 months with monthly interest payments.
    2. The drawing power is calculated basis the stock availability, debtors, and creditors of the Corporate within the available drawing power, a corporate is free to draw down any number of times.
    3. These types of facilities are a ready line of credit available “on tap”
    4. This facility works just like a current account where funds can be used either by issuing cheques or through online transfers like NEFT/RTGS, etc.
    5. The interest rates on these facilities are linked to the bank's Marginal Cost of Lending Rate (MCLR)
    6. Corporates pay interest only for the time and the amount the facility is availed for.

  • Overdraft (OD)

    Facility is for current account holders wherein the customer can draw excess amount than what is standing to their credit. This means that the bank permits the customer to debit his current account below zero. But the customer can withdraw only up to a species limit.

    Granting of loans is among the major functions which commercial banks perform. Post maintaining cash reserves as per RBI norms, banks can lend their deposits to those in need. Banks provide such loans and advances against approved security for productive purposes so as to earn interest.

    Cash Credit and Overdraft are two such short-term loan arrangements. In this write-up, we have elaborated on the differences between cash credit and overdraft.

  • Comparison Chart:

    BASIS FOR COMPARISON CASH CREDIT OVERDRAFT
    Meaning Cash Credit is an provide account, through which banks short-term loans to small businessmen who need instant working capital, against collateral. Overdraft is a short-term loan facility, in which the customer can withdraw excess money than the actual balance, in their current account or it is a secured loan against investments.
    Arrangement It is a revolving credit arrangement. It is not a revolving credit arrangement.
    Associated with Cash Credit Account Current Account or Secured loan against investments.
    Availability of Facility Businessmen only Both individuals and businessmen