Cash Credit & Overdraft Facilities
Flexible financing for daily operations. We help businesses secure revolving credit limits to manage cash flow fluctuations and maintain operational continuity.
Evaluate Credit LimitFlexible Financing for Daily Operations
Cash Credit (CC) and Overdraft (OD) are essential revolving credit facilities designed specifically to bridge the gap between accounts payable and receivable.
Unlike a standard term loan where you receive a lump sum and immediately start paying EMI on the whole amount, CC and OD accounts act like flexible business credit limits. Banks assess your business health and assign a maximum limit. You can withdraw funds when cash is tight to pay vendors or payroll, and deposit customer payments back into the account a few days later. Sahyog Tax & Advisory helps you negotiate the highest possible limits at the lowest interest rates.
Speak to a Finance ExpertThe CC / OD Advantage
Who Needs a CC / OD Limit?
How Overdraft & Cash Credit Works in India
Understanding the mechanics of revolving credit ensures you never pay more interest than absolutely necessary.
1 The Sanction Limit
Based on your business's financial health, past turnover, and available collateral, the bank officially sanctions a maximum withdrawal limit (e.g., ₹50 Lakhs).
2 Drawing Power (DP)
For Cash Credit, the exact amount you can withdraw (Drawing Power) fluctuates monthly based on the stock and debtor statements you submit to the bank.
3 Flexible Utilization
You can withdraw funds via cheque, NEFT, or RTGS up to your allowed limit. You use these funds to pay suppliers or meet immediate payroll.
4 Repayment & Relief
When customer invoices are paid into this account, the outstanding balance drops instantly. Your daily interest calculation drops alongside it.
Benefits of Revolving Limits
Improved Cash Flow
Completely eliminate the stress of delayed client payments. A CC/OD limit acts as a permanent buffer, ensuring you never bounce a vendor cheque.
Ultimate Flexible Usage
There is no rigid EMI schedule. You can deposit surplus cash whenever you want and withdraw it again the very next day without penalty.
Interest on Utilized Amount
You are only charged interest for the exact number of days the funds were outside the account, making it the cheapest way to manage working capital.
Operational Stability
Banks usually renew CC and OD limits annually. As long as your business performs well and you service the interest, this facility remains a permanent asset.
Frequently Asked Questions
What is the difference between Cash Credit and Overdraft?
While both work similarly, the collateral differs. Cash Credit (CC) is granted against the hypothecation of your current assets (like raw materials, inventory stock, and unpaid invoices/debtors). Overdraft (OD) is usually granted against fixed assets, such as residential property, commercial property, or Fixed Deposits (FDs).
What is Drawing Power (DP)?
In a Cash Credit account, Drawing Power is the actual amount you are allowed to withdraw at any given time. Even if your sanctioned limit is ₹50 Lakhs, if your current stock value drops, the bank will lower your DP to match your stock levels to protect their risk.
Is collateral required for CC/OD?
Generally, yes. While the primary security for CC is your stock, banks typically require secondary collateral (like a house or commercial property) to secure the limit. However, under the MSME CGTMSE scheme, certain businesses can get collateral-free limits up to ₹5 Crores.
Optimize Working Capital
Do not let cash shortages stall your business operations. Consult our experts to secure a flexible Cash Credit or Overdraft limit today.
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