Cash Credit

Cash Credit (CC) is a vital short-term working capital facility offered by banks to Micro, Small, and Medium Enterprises (MSMEs) in India. It allows businesses to draw funds up to a pre-sanctioned limit to meet their day-to-day operational expenses. Unlike a traditional loan, interest is charged only on the amount actually utilized by the MSME, not on the entire sanctioned limit. This revolving credit facility is typically secured by the hypothecation of current assets like inventory and accounts receivables. It provides MSMEs with the flexibility to manage their liquidity, bridge gaps between sales and collections, and ensure smooth business operations without disruption. The limit is usually reviewed annually based on the business's performance and working capital cycle.