What is Cash Credit (CC)?
Cash Credit (CC) is a working capital facility allowing the borrower to draw amounts up to a sanctioned limit, against hypothecated stock and receivables. Interest is charged only on the amount drawn, and the borrower must submit periodic stock statements.
| Meaning | Cash Credit (CC) is a working capital facility allowing the borrower to draw amounts up to a sanctioned limit, against hypothecated stock and receivables. Interest is charged only on the amount drawn, and the borrower must submit periodic stock statements. |
|---|---|
| Category | Banking |
| Related Laws | RBI master directions, SARFAESI Act 2002, RDB Act 1993, IBC 2016 (as applicable). |
| Who Uses It | Businesses, banks |
| Why It Matters | Most common working capital instrument; first to slip into stress. |
Cash Credit (CC) explained in plain English
A practitioner's view written for borrowers and advisors — not a textbook definition.
Cash Credit (CC) is a working capital facility allowing the borrower to draw amounts up to a sanctioned limit, against hypothecated stock and receivables. Interest is charged only on the amount drawn, and the borrower must submit periodic stock statements.
In practice, Cash Credit (CC) is used most often by businesses, banks. Each of them sees the term from a slightly different angle: borrowers care about protection and outcomes, lenders care about classification and recovery, regulators care about consistency and disclosure.
Cash Credit (CC) is shaped by RBI master directions and India's recovery laws — primarily the SARFAESI Act 2002, the RDB Act 1993 and the IBC 2016 — and case-specific application matters far more than textbook reading.
Why does it matter? Most common working capital instrument; first to slip into stress. For a stressed borrower, getting this concept right early often saves several months of penal interest, legal cost and credit-score damage.
A real example: A trading firm operates a ₹1 crore CC limit secured by stock and debtors. The mechanics may look complex, but the underlying logic — the bank wants closure, the borrower wants a fair outcome — is straightforward once the right framework is in place.
If you are facing a situation involving Cash Credit (CC), the safest first step is a structured case review with a senior ex-banker who has handled comparable matters across banks and ARCs in India.
Where you'll encounter Cash Credit (CC)
Whenever a loan moves from "Standard" to "stressed", Cash Credit (CC) is one of the words that starts appearing in notices, bank emails and lawyers' opinions.
Sanctioning committees, recovery teams and risk officers use Cash Credit (CC) to classify accounts, decide provisioning and approve resolution paths.
Cash Credit (CC) appears in pleadings, securitisation applications, OAs, Section 7/9 petitions and SARFAESI writs as part of the dispute record.
When stressed loans are sold to ARCs or special-situations investors, Cash Credit (CC) is used in term sheets, assignment agreements and due-diligence reports.