Stock & debtor level

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Neeraj Sinha

Neeraj Sinha (Querist)
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19 January 2019 what should be stock and debtor limit if cash credit limit is rs. 1000000.

Dipika Shah

Dipika Shah (Expert)
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19 January 2019 It depends on the projections of sale and purchase of the entity. Whether the entity will have enough business to have stock and debtors at level which is acceptable compared to CC of Rs.10,00,000.

The margin which is fixed by the bank for releasing CC of Rs.10,00,000 to be taken into consideration such that DP is maintained at the level of CC outstanding at any given point of time. The level of stock or debtors for a CC of Rs.10,00,000 depends from bank to bank and proposed sanction terms of bank referring to margin.