2007-02-21 15:37:08 · 8 answers · asked by Srinivasan 1 in Business & Finance ➔ Credit
OVER DRAFT CAN BE GIVEN AGAINST DEPOSITS, STOCKS, UNDER HYPOTHECATION TO BANKS. CASH CREDITS CAN BE GIVEN AGAINST STOCKS BY PLEDGE OF THE STOCK.
2007-02-21 19:29:38 · answer #1 · answered by nightingale 6 · 0⤊ 0⤋
Both cash credit and overdraft are sources of short term finance to business entities.
In case of cash credit, the bank of the business entity fixes a ceiling of cash withdrawal facility for the entity which is free to withdraw within the fixed limit by way of any number of instalments. The interest is charged on the amount actually withdrawn by the firm. However, as the bank cannot use the money allocated as cash credit , it charges a certain amount in respect of the amount not withdrawn by the firm
In case of overdraft, the bank fixes the limit upto which a firm can withdraw money, and the interest is charged only on the amount actually drawn by the firm.
Cash credits are being discouraged by the banks nowadays, as it entails locking up of funds for the banks, which bank would have utilised otherwise.
2007-02-21 22:55:59 · answer #2 · answered by sivarama k 1 · 0⤊ 0⤋
Cash: Money you have previously earned and can spend on what you need or want.
Credit: Money you are borrowing from someone else to spend on what you need or want that you will need to pay back to them, often with interest.
Overdraft: A fee that is to be paid when a person withdraws more money than is in the account - typically with checking accounts. (For example, if a person has $75 in their account and writes a check for $100 and it is cashed, they will have a -$25 balance plus an Insufficient Funds fee which varies by bank or credit union.)
As a personal note, I *strongly* advise you to never borrow money (credit) and do not write a check when you know the money is not in your account (overdraft). Live on less than you earn and you will do well. I recommend taking the class "Financial Peace University" by Dave Ramsey. Go to www.daveramsey.com and search for a class near you.
2007-02-21 15:42:26 · answer #3 · answered by Sidewinder 3 · 0⤊ 0⤋
Cash credit is given on the Hypothecation of goods, where as the over draft facility is given on over and above on the credit limit only for limited period of time.
2007-02-22 04:23:14 · answer #4 · answered by panneerselvam s 5 · 0⤊ 0⤋
CASH CREDIT IS A PART OF WORKING CAPITAL FINANCE
AGAINST HYPOTHECATION OF STOCK
WHERE PERIODICAL STOCK STATEMENT TO BE SUBMITTED
OVERDRAFT IS A FIXED LIMIT ALLOWED TO A CURRENT ACCOUNT FOR OVERDRAWING THE FUNDS FROM THE ACCOUNT IE DEBIT BALANCE
IT CAN BE FULLY SECURED OR PARTIALLY SECURED AS APART OF CREDIT FACILITY TO A BUSINESS ENTITY
2007-02-22 17:35:14 · answer #5 · answered by HEMANT B 1 · 0⤊ 0⤋
Cash Credit Hypothecation
2017-01-20 12:06:44 · answer #6 · answered by suozzo 4 · 0⤊ 0⤋
Cash credit means you have money in your account. Overdraft means you took out too much money from your account.
2007-02-21 17:27:30 · answer #7 · answered by Pinky Lee 2 · 0⤊ 0⤋
cash credit and over draft diffrant beetwin
cash credit mence-cash submit
over draft mence-more cash take on our balance
2007-02-21 19:38:14 · answer #8 · answered by Anonymous · 0⤊ 0⤋