C/c limit

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Querist : Anonymous

Querist : Anonymous (Querist)

25 May 2010 sir 1 customer has approached me for fresh c/c limit of 25 lacs. Below are his details:
Sale of last year(2009-10) 1.30 cr
Sale of 2008-09 75 lacs
Net Profit shown in last year 4 lacs
Tax Paid - 13000
Proprietorship concern

Sir i am not convergent with formalities involved. Plz guide me. I dnt want to loose the client as he will also provide me audit.

Plz guide in detail

Thanks

CA Shiv

CA Shiv (Expert)
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25 May 2010 sorry but not able to understand your question properly.....

Rahul Gupta

Rahul Gupta (Expert)
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25 May 2010 If I am getting right, then your client wants you to prepare the docs for raising CC Limit. In such case prepare the CMA Data as per the Bank Format.

Some points which are generally considered while preparing CMA Data >

- The current ratio should be at least greator than 1.33.
- The sales should be generally 4 or 5 times of the amount of loan.
- There should be sufficient stock to act as collaterally to the loan amount.
- In case, there is another loan, the bank requires the status of the loan and defaults made, if any.
- The loan payback capacity of the firm identified by the cash and bank balance, debtors collection period etc.
- Various ratios are to be computed related to working capital and assets.
- The capital contribution in relation to the loans and liabilities.

Link for some formats is given below. also check the files section for more.

https://www.caclubindia.com/share_files/cma-data--20547.asp

https://www.caclubindia.com/share_files/cma-data-19315.asp

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CMA. CS. Sanjay Gupta

CMA. CS. Sanjay Gupta (Expert)
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26 May 2010 WELL EXPLAINED BY RAHUL JI

Querist : Anonymous

Querist : Anonymous (Querist)

26 May 2010 Thanks 4 ur advice Rahul sir.

Can u suggest me the links where i can get complete information about how to get a fresh c/c limit?
I want to gather all relevant details.

Thanks

Rahul Gupta

Rahul Gupta (Expert)
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26 May 2010 Hello,
What sort of information you require. generally, every bank has different rules and conditions for issuing CC Limits.

C/C = Cash Credit : Granted against hypothecation of goods. here the goods in the stores / godown / factory is kept as security and the client/s enjoy the running loan against these. They are to keep a margin and submit the Stock Statement which will speak for the goods in the list and its latest valuation. It is verified and stale items excluded.

In CC Limit, bank will open a current account anf you are allowed to withdraw from the account the amount upto the maximum of the limit sanctioned. You can make transactions of deposits and withdrawls within the sactioned limit. The nterest will be charged on the amount outstanding only.

Terms and conditions, amount of loan etc. differs from bank to bank. Please, let me know for which bank you require, may be i Can collect some information.

Regards

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Querist : Anonymous

Querist : Anonymous (Querist)

26 May 2010 thanks sir. i am luking 4 limit in OBC. Do you recommend any othe bank where client gets max benefits. Client is genuine and his overall position is very good with no defaults in he past.

Do i have to prepare project report also?

Rahul Gupta

Rahul Gupta (Expert)
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27 May 2010 I cant say about the bank. That totally depends upon bank to bank and also the clients choice. However, for project Report , again it depends upon bank. some requires it while others don't.
so it better to check the bank requirements, whatever they require you need to present it.

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Querist : Anonymous

Querist : Anonymous (Querist)

27 May 2010 thanks sir