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Empower Your Business with Flexible OD/CC Limit Solutions
What is OD/CC Limit?
An OD (Overdraft) and CC (Cash Credit) limit are types of short-term financing provided by banks to businesses to meet their working capital requirements. These credit facilities allow businesses to withdraw funds beyond their account balance or borrow against their credit limit to cover operational expenses.
Features of OD/CC Limit
- Flexibility: Both OD and CC limits offer flexible borrowing options, allowing businesses to withdraw funds as needed up to the sanctioned limit.
- Interest on Utilized Amount: Interest is charged only on the amount utilized, not on the entire sanctioned limit, making it a cost-effective borrowing option.
- Revolving Credit: These are revolving credit facilities, meaning the borrowed amount can be repaid and redrawn multiple times within the limit.
- Short-term Financing: Primarily intended for short-term financial needs, helping businesses manage cash flow and working capital requirements.
- Secured and Unsecured Options: Both secured (against collateral) and unsecured (without collateral) options are available, depending on the borrower's creditworthiness.
- Renewable Facility: The credit limit is usually reviewed and renewed annually based on the business’s financial performance.
Types of OD/CC Limit
Secured Overdraft
These facilities require collateral, such as property, inventory, or receivables. The credit limit is determined based on the value of the collateral provided.
Unsecured Overdraft
These do not require collateral and are granted based on the business’s credit history, financial performance, and relationship with the bank.
Temporary Overdraft
A short-term facility provided to businesses to meet urgent financial needs. It is usually granted for a specific period and must be repaid within that time frame.
Clean Overdraft:
Provided without any specific security but typically requires the borrower to maintain a minimum balance or turnover in their account.
Secured Overdraft
These facilities require collateral, such as property, inventory, or receivables. The credit limit is determined based on the value of the collateral provided.
Unsecured Overdraft
These do not require collateral and are granted based on the business’s credit history, financial performance, and relationship with the bank.
Temporary Overdraft
A short-term facility provided to businesses to meet urgent financial needs. It is usually granted for a specific period and must be repaid within that time frame.
Clean Overdraft:
Provided without any specific security but typically requires the borrower to maintain a minimum balance or turnover in their account.