Cash Credit Loan
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.
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: March 21, 2022
Nepal Rastra Bank issued Mega Bank its Operating License on 4th Shrawan, 2067 and it commenced banking operations from 7th Shrawan 2067. It lies under class “A” commercial bank which has achieved Nine years of operations and is on its way to realizing the aspirations of 2,396 promoters who incorporated chiefly from middle-class households spread over more than sixty three Districts of Nepal. Mega Bank has merged with Paschimanchal Development Bank and Tourism Development Bank. Banking Services of Mega Bank Limited are dedicated to the whole monetary strata of the Nepalese society from “Halo” to “Hydro”. Mega Bank Nepal Limited is currently trading in Nepal Stock Exchange with symbol MEGA. MEGA has provided a dividend return of 7.85 percent in the fiscal year 2074/75. Mega Bank Limited has appointed Nabil Investment Banking Limited as it’s share registrar. Mega Bank is dedicated to supplying financial options to not just the pinnacle middle or backside of the Pyramid.
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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