working capital financing


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Working Capital Finance

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Working capital???

Working Capital Financing by Bank :

Working Capital Financing by Bank A commercial bank is a business organization which deals in money i.e. lending and borrowing of money. One of the most important functions of banks is to finance working capital requirement of firms. In determining working capital requirements of a firm, the bank takes into account its sales, Capacity ,Character , production plans and desirable level of current assets.

Credit Limit:

Credit Limit The amount approved by the bank for the firm’s working capital requirement is called credit limit. It is the maximum fund which a firm can obtain from the bank. In the case of firms with seasonal businesses, the bank may approve separate limits for ‘peak season’ and ‘non-peak season

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This Advances are usually given against the security of the current assets of the borrowing firm.

Forms Of Bank Credit:

Forms Of Bank Credit Cash Credit Overdraft Bills Purchase and Bill Discounting Working Capital Loan

Cash Credit:

Cash Credit The bank specifies a predetermined limit and the borrower is allowed to withdraw funds from the bank up to that sanctioned credit limit against a bond or other security. the borrower can not borrow the entire sanctioned credit in lump sum; he can draw it periodically to the extent of his Requirement Repayment can be made whenever desired during the period.

Cash Credit is secured against …:

Cash Credit is secured against … Cash Credit is primarily secured against Raw Material, Work-in-progress or Semi Finished Goods, Finished Goods


Overdraft The borrower is allowed to withdraw funds in excess of the actual credit balance in his current account up to a certain specified limit during a agreed period against a security.

Overdraft can be availed against:

Overdraft can be availed against any financial assets like Fixed Deposits, Bonds, Shares Securities, Gold & Silver Jewelry Physical Assets like Motor Car, Pool of Vehicles,

Bills Purchase and Bill Discounting:

Bills Purchase and Bill Discounting The bank purchases the bill of exchange your company receives against a product sale, at a discount, thus doing away with the delay in realizing the receivables.

Working Capital Loan:

Working Capital Loan Sometimes a borrower may require additional credit in excess of sanctioned credit limit to meet unforeseen contingencies. Banks provide such credit through a Working Capital Demand Loan (WCDL) This arrangement is presently applicable to borrowers having working capital requirement of Rs.10 Crores or above. On such additional credit, the borrower has to pay a higher rate of interest more than the normal rate of interest.

Own Fund ??:

Own Fund ??

THANK YOU Presented by:-Sanket.J Sarika.c:

THANK YOU Presented by:- Sanket.J Sarika.c