cash credit is a short-term loan extended to a company by a bank. It enables a company to withdraw money from a bank account without keeping a credit balance. The account is limited to only borrowing up to the borrowing limit.
Last Updated Date: May 17, 2022
With the vision to become a Leading Bank of the country by providing premium products and services to the customers, thus ensuring attractive and substantial returns to the stakeholders of the Himalayan Bank was established in 1993. The most recent rating of Himlayan Bank Limited by Bankers’ Almanac as country’s number 1 Bank easily confirms their claim and to become the Bank of first choice is the main objective of the Bank. The mission of this Bank is to become the preferred provider of quality financial services in the country. There are two components in the mission of the Bank; Preferred Provider and Quality Financial Services; therefore at HBL they believe that the mission will be accomplished only by satisfying these two important components with the Customer at focus. The Bank always strives positioning itself in the hearts and minds of the customers. Legacy of Himalayan Bank lives on in an institution that's known throughout Nepal for its innovative approaches to merchandising and customer service. Products such as Premium Savings Account, HBL Proprietary Card and Millionaire Deposit Scheme besides services such as ATMs and Tele-banking were first introduced by HBL. Other financial institutions in the country have been following HBL’s lead by introducing similar products and services.
Documents Required for Cash Credit
A Cash Credit (CC) is a short-term source of financing for a company. In other words, cash credit is a short-term loan extended to a company by a bank. It enables a company to withdraw money from a bank account without keeping a credit balance. The account is limited to only borrowing up to the borrowing limit and interest is charged on the amount borrowed and not the borrowing limit. Cash credit and overdraft are two types of short-term financing that financial institutions provide to their customers. Both are used to prevent checks from bouncing or debit cards from being declined when there are insufficient funds in checking accounts. The primary difference between these forms of borrowing is how they are secured.
Cash credit is commonly offered to businesses rather than to individual consumers. Financial institutions, such as banks and credit unions, normally require a business customer to put down a form of security as collateral in exchange for cash. This security can be a tangible asset, such as stock or property. The credit limit extended on the cash credit account is normally a percentage of the value of the collateralized security. cash credit is a short-term financing solution a business customer has at their disposal. If the customer doesn't have enough funds in their account, they can use the cash credit for routine banking transactions up to the credit limit. Unlike other credit products, interest is charged on the daily closing balance. Cash credit may also be referred to as a cash reserve account. A cash reserve is an unsecured line of credit that acts just like overdraft protection (see more below). It typically offers higher overdraft limits and has smaller real interest costs on borrowed funds than an overdraft, since penalty fees are not triggered for using the account.
The principle benefits of a cash credit account to a borrower are that, unlike the customer, borrowing on a fixed loan basis, they may operate the account within the stipulated limit as and when required and can save interest by reducing the debit balance whenever the borrower is in a position. Cash Credit is allowed against the security of tangible assets like hypothecation of stocks, plant and machinery and its insurance policy with Banker's clause, book debts/receivable and other current assets, etc.
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