Credit Monitoring Arrangement (CMA) report
What are the optimum ratios one should have in CMA data?
What is the basis on which banks provide Overdraft (OD) facilities?
What are the documents to be submitted for getting OD or renewing OD?
What are the facilities available for SME (Small Medium Enterprises)?
CMA ratios are not standard for all the banks. Each banks fixes its own limits and criteria for various facilities.
Some of the Standard ratios for OD facility are
1. Net Sales/ Total Tangible Assets > 1.5
2. Current Ratio > 1.33
3. Debt Equity Ratio = 1.79
4. TOL / TNW = 1.79
Banks generally provide OD facility based on a % of your turnover. It will be in the range of 20-25% of your projected turnover.
Illustrative Documents required for Getting OD/Renewing OD is as follows
1. CMA Report by a Chartered Accountant
2. Tax Audit report & ITRs for Past 3 years
3. Financials for past 3 years
4. Projected Financials for current and next year
5. VAT returns for Previous year
6. Bank statement for previous year
7. Collaterals , if OD value exceeds 20 lakhs.
Facilities for SME Sector
1. SME Sector can get upto 25% of Turnover upto maximum of Rs 1 crore under OD/CC facility.
2. SME should engage in Manufacturing or Services( Trading is not eligible)
3. SME certificates, SSI RC need to be produced.
4. OD/CC facilities are collateral free loans with lesser rates of interest