A plain-English walkthrough of Credit Monitoring Arrangement (CMA) data â the standard set of financial statements every borrower submits for working capital and term loan review â with the exact format banks expect and how credit officers actually read it.
Credit Monitoring Arrangement (CMA) data is a standardised set of financial statements â historical, estimated and projected â that a borrower submits to a bank so the bank can assess how much working capital or term finance the business genuinely needs, and later track whether the account is performing as projected.
The format traces back to the Tandon Committee's 1975 recommendations for working capital discipline. Even though RBI withdrew the mandatory prescription in 1997, almost every Indian bank still asks borrowers above a certain exposure threshold to submit data in this format because it standardises comparison across years and across borrowers.
Most banks follow the same eight annexures, usually presented side-by-side for 2 years audited/actual, 1 year estimated (current year) and 2-3 years projected:
Facility-wise limit (CC, Term Loan, LC, BG) from each bank/consortium member, sanctioned and outstanding.
Sales, cost of sales, gross profit, operating expenses, EBITDA, interest, depreciation and net profit â essentially a management-style P&L.
Full assets and liabilities, regrouped into current/non-current so ratios can be computed directly from it.
Break-up of stock, receivables, cash and other current assets/liabilities used to compute the Working Capital Gap.
Applies the bank's chosen method (Turnover, Tandon Method I/II) to Form IV figures to arrive at the sanctionable working capital limit.
Sources and uses of long-term funds â shows whether the business is using long-term money to fund current assets or vice versa (a red flag either way).
Current Ratio, TOL/TNW, DSCR and other benchmark ratios computed year-on-year from the forms above.
Loan-wise repayment schedule, moratorium and outstanding balance for every term facility, used to verify the DSCR working.
Related: Forms IV and V feed directly into Working Capital Assessment, while Form VIII feeds into Term Loan Assessment.
Sales in Form II should tie to receivables movement in Form IV; net profit should tie to the reserves movement in Form III. Any mismatch usually means the CMA was prepared in a hurry or by a different hand than the audited accounts.
A sudden 40% sales jump in the projected year, with no corresponding capacity expansion or new order book evidence, is the single most common red flag credit officers look for.
Experienced appraisers don't just read Form VII â they recompute Current Ratio, TOL/TNW and DSCR themselves from Forms III/IV to confirm the borrower's own workings.
If long-term sources (fresh equity, term loan) are shown funding current assets while fixed assets grow faster than depreciation would explain, it may indicate funds are being diverted from the sanctioned purpose.
If CC utilisation has been consistently near or above the last-sanctioned MPBF for several months, that itself is grounds to reassess the limit rather than wait for the next annual review.
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