Cash Credit
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: May 16, 2022
Nepal Credit & Commerce Bank Ltd. (NCC Bank) formally registered as Nepal - Bank of Ceylon Ltd. (NBOC), commenced its operation on October 14, 1996 as a Joint Venture with the Bank of Ceylon, Sri Lanka. It was then the first private sector Bank with the largest authorized capital of NRS. 1,000 million. The Head Office of the Bank is located at Bagbazar, Kathmandu. The name of the Bank was later changed to Nepal Credit & Commerce Bank Ltd., (NCC Bank) on 10th September, 2002, due to transfer of shares and management of the Bank from Bank of Ceylon, to the Nepalese Promoters. NCC Bank completed 23 years of its banking services on October 14, 2019 and recently entered into a historic merger with four Development Banks – Infrastructure Development Bank Ltd., Apex Development Bank Ltd., Supreme Development Bank Ltd. and International Development Bank Ltd. NCC Bank started its joint transaction from January 01, 2017 has now become one of the largest private sector commercial banks. At present NCC provides banking services and facilities to rural and urban areas of the country through its 120 branches, 85 ATMs and 4 Extension Counters scattered all over the country from Far West to Far East. The Bank has developed a corresponding agency relationship with more than 150 International Banks having a worldwide network.
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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