Fund the gap between buying and getting paid.
Cash credit and overdraft limits for the recurring cycle every trading and manufacturing business runs: paying suppliers and salaries before customers pay you. Draw against the limit, repay as collections arrive, and pay interest only on what is actually drawn.
How a working capital limit is actually sized
Banks compute your working capital gap — inventory plus receivables, less creditors — and fund a share of it, with the balance expected as your own margin. For smaller borrowers the turnover method is common: a limit near 20% of projected annual turnover, with 5% as margin. Larger borrowers are assessed on the actual gap using the MPBF (Maximum Permissible Bank Finance) method.
What you can actually draw — drawing power — is recomputed monthly from the stock and book-debt statement you submit, after margins and after excluding stock beyond a certain age and receivables beyond 90 days. The sanctioned limit is a ceiling; drawing power decides what you can use.
A cash credit account is renewed annually, subject to your financials and conduct. Clean, on-time renewal, accurate monthly statements and disciplined stock rotation are what keep the limit stable or growing year over year.
Indicative pricing in 2026
CC/OD pricing tracks turnover scale, stock quality and banking conduct. Collateral or CGTMSE cover moves the rate down further.
Public Sector Banks
Tier-1 Private Banks
NBFCs & HFCs
Getting more out of a working capital limit
Statements decide your drawing power
The sanctioned limit is a ceiling; the monthly stock and book-debt statement decides what you can actually draw. Late or inconsistent statements shrink drawing power and, repeated, get the limit cut at renewal. Clean monthly submission is the cheapest protection for the facility you have.
Ageing debtors quietly consume the limit
Receivables beyond ninety days are generally excluded from drawing power. A business with lax collections can hold a large sanctioned limit while actually able to draw very little of it. Collections discipline is credit discipline.
Turnover method versus MPBF changes what improves your limit
Smaller borrowers under the turnover method benefit most from steady, well-documented turnover growth. Larger borrowers under MPBF benefit more from managing the actual inventory-plus-receivables gap down. Know which method applies to you before trying to negotiate a higher limit.
Documents required
Incomplete files cause most multi-week delays. We assemble the full set upfront, in the order credit teams read it.
KYC & constitution
- PAN & Aadhaar of all promoters / partners / directors
- Certificate of incorporation, MOA-AOA or partnership deed
- Board resolution or partners' authority letter
- GST registration & trade licence
Financials
- 3 years ITR with computation of income
- Audited balance sheet, P&L and schedules
- 12 months' bank statements of all operating accounts
- GST returns for the last 12 months
- Existing loan sanction letters & repayment track record
Stock & receivables
- Current stock statement with ageing
- Debtor and creditor ageing analysis
- Projected turnover and working capital cycle for the coming year
Setting up or renewing a CC/OD limit
Working capital gap assessment
We compute the gap under whichever method applies to you, and model the realistic limit before approaching any lender.
Documentation for renewal or fresh sanction
Financials, stock and debtor statements assembled the way credit teams actually read them.
Placement or renewal negotiation
Filed with lenders whose appetite fits your scale and sector, or negotiated directly at renewal for an existing facility.
Ongoing statement discipline
We help set up the monthly reporting cadence that keeps drawing power at its maximum through the year.
Related facilities & deep-dive guides
Every facility below is placed through the same 80+ lender panel. The long-form guides carry the working numbers, worked examples and lender-by-lender detail.
Frequently Asked Questions
The questions our advisory desk is asked most often about Working Capital · CC & OD.
Because drawing power is recalculated every month from your stock and book-debt statement, after applying margins and excluding aged stock and receivables beyond ninety days.
The sanctioned limit is only the ceiling. Accurate, on-time statements and disciplined stock and debtor management are what let you use the facility you are paying for.
Either as roughly 20% of projected annual turnover (the turnover method, common for smaller borrowers) or as the actual working capital gap under the MPBF method (larger borrowers).
Whichever applies, realistic and well-documented projections do more for the outcome than optimistic ones, since the limit is reviewed annually against actuals.
Yes, up to reasonable amounts. CGTMSE cover allows banks to extend collateral-free working capital to eligible MSME borrowers, and several lenders run unsecured trade facilities based on GST and banking data.
Beyond the CGTMSE ceiling, expect collateral or partial security. See our government schemes desk for current CGTMSE limits.
Cash credit is extended against hypothecation of stock and receivables, drawing power tied to those assets. Overdraft is typically extended against a fixed deposit, property or other collateral, or on the strength of banking relationship, without the monthly stock-statement mechanism.
CC suits trading and manufacturing businesses with inventory; OD suits businesses with stronger balance sheets or clean collateral wanting simpler operation.
At renewal, yes — the limit is reassessed against actual performance. A significant turnover decline typically results in a reduced limit at the next annual review, even mid-tenure in some structures if conduct deteriorates.
Consistent, even if modest, turnover with clean banking conduct protects the limit better than volatile high turnover with irregular conduct.
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