Instantly calculate Drawing Power on Stock, Book Debts/Debtors and Sundry Creditors โ for Hypothecation, Stock-only, Book-Debt and Pledge based Cash Credit limits, as used by Indian banks.
As per the latest monthly/quarterly stock statement submitted to the bank
Drawing Power (DP) is the maximum amount a borrower is permitted to draw in a Cash Credit / Overdraft account against hypothecation of stock and book debts, calculated on the basis of the latest stock statement submitted to the bank โ not the sanctioned limit itself. A borrower can never draw more than the lower of the sanctioned limit and the DP.
If the outstanding balance in the account exceeds the DP, the account is treated as irregular / out-of-order. Under RBI's IRAC norms, a CC/OD account that remains continuously out of order for 90 days gets classified as a Non-Performing Asset (NPA), which is why banks insist on timely, accurate stock statements.
Buffer retained by the bank on inventory value to absorb price fluctuation & obsolescence risk
Higher margin than stock, since receivables carry credit risk of the buyer
Stock funded by unpaid suppliers isn't the borrower's own โ banks exclude it before applying margin
Actual margins are bank & industry specific โ always refer to your sanction letter
| CC Limit Type | Security | Typical Stock Margin | Typical Debtor Margin |
|---|---|---|---|
| Hypothecation (Stock + Book Debts) | Stock & Receivables | 25% โ 30% | 35% โ 50% |
| Stock-only CC/OD | Inventory only | 25% โ 40% | โ |
| Book Debts-only (Services/Bills) | Receivables only | โ | 25% โ 40% |
| Pledge of Stock | Stock in bank's possession/godown | 10% โ 25% | โ |