Diff between cash credit & overgraft

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Querist : Anonymous

Querist : Anonymous (Querist)

14 April 2012 dear sir,

please tell me the difference between the cash credit & bank overdraft.

CA Kishore Tallam

CA Kishore Tallam (Expert)
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14 April 2012 Cash credit Account
This account is the primary method in which Banks lend money against the security of commodities and debt. It runs like a current account except that the money that can be withdrawn from this account is not restricted to the amount deposited in the account. Instead, the account holder is permitted to withdraw a certain sum called "limit" or "credit facility" in excess of the amount deposited in the account.
Cash Credits are, in theory, payable on demand. These are, therefore, counter part of demand deposits of the Bank.

Overdraft
The word overdraft means the act of overdrawing from a Bank account. In other words, the account holder withdraws more money from a Bank Account than has been deposited in it.

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CA PRAVEEN SINGH

CA PRAVEEN SINGH (Expert)
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14 April 2012 AGREE WITH ABOVE:-
IN CASH CREDIT,A LIMIT IS FIXED BY BANK UP TO WHICH AMOUNT CAN BE WITHDRAWN.ALSO KNOWN AS (CREDIT FACILITY GIVEN BY BANK)ON THE SECURITY OF COMMODITIES & STOCK.
OVERDRAFT IS WITHDRAWAL OF MONEY MORE THAN DEPOSIT ON ACCOUNT.

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