3 Differences between cash credit loan, demand loan and short term loan
Diana,
Cash Credit is defined as a short term loan provided by banks or financial institutions to its customers upto a certain limit. The customer can withdraw the required amount not exceeding such specified limit. For example, credit granted by a bank to a customer is of Rs 2,50,000. In this case, the customer can withdraw the amount as required by him but not exceeding the limit of Rs 2,50,000. In the cash credit facility, the limit of withdrawal amount is not limited to the deposits in the customers’ account. In other words, it allows a business or an individual to withdraw the amount ( upto a limit as specified ) more than the amount of deposits in their account.
As per the latest guidelines issued by CBSE, bank overdraft is to be treated as 'short-term borrowings'.
You can also refer to the following link.
https://www.meritnation.com/ask-answer/question/what-is-the-difference-between-cash-credit-and-bank-overdraf/accountancy/9886858
Cash Credit is defined as a short term loan provided by banks or financial institutions to its customers upto a certain limit. The customer can withdraw the required amount not exceeding such specified limit. For example, credit granted by a bank to a customer is of Rs 2,50,000. In this case, the customer can withdraw the amount as required by him but not exceeding the limit of Rs 2,50,000. In the cash credit facility, the limit of withdrawal amount is not limited to the deposits in the customers’ account. In other words, it allows a business or an individual to withdraw the amount ( upto a limit as specified ) more than the amount of deposits in their account.
As per the latest guidelines issued by CBSE, bank overdraft is to be treated as 'short-term borrowings'.
You can also refer to the following link.
https://www.meritnation.com/ask-answer/question/what-is-the-difference-between-cash-credit-and-bank-overdraf/accountancy/9886858