Cash Credit - Definition

It is an arrangement whereby banks allow the borrower to withdraw money upto a specified limit. This limit is known as cash credit limit. Initially this limit is granted for one year. This limit can be extended after review for another year. However, if the borrower still desires to continue the limit, it must be renewed after three years. Rate of Interest varies depending upon the Amount of limit. Banks ask for Collateral security for the grant of cash credit. In this arrangement, the borrower can draw, repay and again draw the amount within the sanctioned limit. Interest is charged only on the amount actually withdrawn and not on the amount of entire limit.

Terms near "Cash Credit"

Cash Market

Cash on deposit

CDF

Central Bank

Certificate of Deposit (CD)

Channel

Chartists

CHE

CHF

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