Lecture 25: Difference between Cash credit, Overdraft and Drop line overdraft facility.
ฝัง
- เผยแพร่เมื่อ 5 ก.ย. 2024
- Covering comprehensive detail about the working method of Cash credit, Overdraft and Drop line overdraft facility in the banks.
This video shall cover:
1. Detailed meaning.
2. Working methodology
3. Difference between them in terms of LTV call, Bank's comfort, Rate of interest, Application of drawing power, Repayments, Stock audits, stock statements, monitoring and many more.
#Cashcredit #Overdraft #Typeofworkingcapitalfacility
I wish bank employee see this and learn. Most of them cant explain DOD . You are very good at this sir.
Thank you
sir you really the best. you have made these video with great explanation
Thank you
Such an interesting video with clear concept. Thank you for sharing.
Thank you
God bless you many thanks for all your videos on working capital
Thank you 👍
Really too good video i have never seen this type of explanation regarding CC,OD,DOD
Thank You So Much
Your welcome
Such an interesting video! Cleared my concepts. Thank you.
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No
Very knowledgeable.. Thanks for sharing
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Watched most of your videos and it really helped... thank you Sir 🙏
Thank you
Thank you so much sir
Your welcome
How to calculate assess income
Like daily Kirana store, Vegetables sellers, Fruit sellers, Auto drivers, Taxi drivers etc.
I like your every video related to credit manager decisions.
Thank you Rishi. Income is assessed basis judgement on case to case upon actually visiting the client
Bahut achha laga sir
Thank you
Excellent Video sir....please share more such videos....related to Banking...Very useful for Bankers like us
Thank you
Excellent video Sir 👌👌
Thank you 👍
Ankush Sir.... Really nice Vedio....what a great understanding of topic and I Hindi that's biggest opportunity... Understanding become easy with own language
Thank you
Nice video, I gain good knowledge. Thanks sir
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Dear sir
Ur way of teaching and knowledge is superb sir..
Thank you 👍
Thanks sir so many blessings to you
Thank you
V well explained thank you 🙏🏻
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Cleared my doubts...thank you
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Kindly make video on real estate funding for developers..thanks
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Nice explanation sir
Thank you
Thank u sir fr valuable information..
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Thank you soo much really it was very helpful
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Thankyou so much sir, very well explained.. watched ur video full..
Sir..plz make video on below mentioned topics plz,
1- how to check account stateenet of limit and loan account.
2 - how to chek churining of accounts
Thanks Gurpreet.
Will make video on topics suggested by you when I come to the topic of banking analysis
Good Explain👍
Thank you
Succeeding month ke liye apply hoti hai to agle machine to extra sale ho sakti hai jiske liye extra funds ki jarurat bhi to ho sakti hai, usse wc loan ka purpose defeat ho jayega
Agar next month extra jrurat pdi to client interim stock statement de k and credit approval le k DP revise krwa skta hai
Excellent 👍❤️
Thank you
Thanks for this😀
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Thank you
Your welcome
Hello sir,
I have two questions in mind:-
1.Is it mandatory to have current account with bank to avail cash credit, overdraft or dropline facility? Whether all these facilities are connected to current account??
2.As u have mentioned that these aforesaid mentioned facilities are sanctioned against stock, debtors and creditors; then why banks are looking for more comfort by keeping collateral on property??
1. Current account not mandatory
2. There are two type of securities
- primary security - it is the asset which is financed through the loan. Like stock, debtors etc. it is taken as normal security
- collateral security - it is a fall back plan when the borrower defaults in the loan.. practically since stock etc. are moveable assets, the borrower discard them before committing default so that bank doesn't get lien on them.. therefore immovable property is taken as collateral for additional and concrete comfory
@@AnkushJainGot it sir...Thank u so much.🙏🙏
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If you are having knowledge regarding this. Please share whenever you are available.😊
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Sir so client have to repay principle also in DOD? so what makes it different from a term loan.
For example if dod amount is 60 lakhs for 60 months
1st month client utilized 60 Lakhs next month he have to pay 1 Lakh principle?
Yeah. The difference is of interest. In DLOD, the interest is to be paid basis utilisation only. If client receive any lump sum money then he can deposit the same in DLOD account and pay interest on utilisation. While in term loans, the whole loan gets utilised and interest is paid on full
Sir, is it not true that nowadays, bankers have started using CC and OD term interchangeably? Ideally as per this lecture, when an OD facility is given then there should be no DP calculation, but I have seen credit facilities given to large corporates under the name "Overdraft" and the bank still calculates the DP monthly on the OD facility. Can you please correct if this understanding is wrong?
I have not seen this being used interchangeably but if you are saying that you have seen then it might have been some exceptional case
Dear Sir, Jo monthly stock statement customer bank ko deta hai uska bank monthly basis per audit krata hai in all cases ?
Audit is done on annual basis usually. Sometimes for large loan exposures, banks can also stipulate half yearly or quarterly stock audit. Stock audit is never done on monthly basis
Thank you sir fr quickly reply.
You are doing great work.
Thank you
Watched
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Sir would you send the link for vacancies for the credit manager again. This was seen today but now it is not traceable. Specially vacancies for Bandhan Bank.
Hi please check in the community tab on my youtube page
What if, client is in multiple banking, then can a client open multiple current account.
Yes, rbi current account circular need to be complied
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Thank you
We should always recommend CC limit to client over OD/DOD facility.Is my understanding correct?
Not always... Sometimes business model warrant only OD structure
Can you give examples of business model that warrant only OD structure.
Service entities, restaurents, hospitals etc
Sir, Is Intrest on CC part of Drawing power limit? Ex- DP limit for April 2022 is Rs 25 crore but company has utilized Rs (25 crore + 2 lakh).
Yes, utilisation to be seen not sanction amount
hello Sir,
happy gurpurab ...
Sirbcould you please create a video on GECL and ECLGS facility in detail. Why it was started and its working.
Happy Gurupurab. Yeah i was also thinking about this topic for a long time
@@AnkushJain please sir kindly make it.
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@@AnkushJain Sir have u created the videos for GECL AND ECLGS
Sir what is the difference between ODAP and LAP.
OD is like a limit which I have explained in the video.. LAP is a term loan in which emi is paid monthly
what kind of security we will give in OD and DOD
Pl watch lecture no. 9, it covers securities that can be offered to banks
Sir. How to assess a DOD facility. I mean financial assessment such as that in CC like Turnover Method or MPBF method.
Yes if given for working capital. Further, dscr should also justify
There is some formula for calculation such as:
=Cash Profit* (Multiplier) - Obligations
# Obligations for loans availed in past 12 months and to multiply the obligations with the remaining loan tenor or tenor of the loan proposed (tenor for whichever is lower).
Can you please explain what is the logic behind this formula. How do banks normally calculate the eligibility of an eligible amount?
This is not a drawing power formula. It is related to DSCR
in the DOD facility you have to pay interest every month like OD/CC
??
Dear Sir,
I'm Sanjay Datt Bajpei from Lucknow Currently working as Asst Credit Manager in NBFC. I want to do distance mba. Is it worth it ? Or certificate course in credit if yes then which certificate program will be helpful?
Present qualification?
First of all thank u so much for the woderful session sir! question from my side: overall can we conclude that DLOD is given when the borrower is financially not performing well?
and for Insurance- Insurance should be taken for full value of security or only equal to value of facility? If possible plz make a comprehensive video on that!
Thank you vimlesh.
It is not necessary that DLOD is given to stressed clients only. If client wants to repay his obligation then he can take this option. Sometimes client is overall good but books of accounts are mismanaged by his accountants then in that case also DLOD is preferred.
Insurance is normally taken for facility amount or actual stock whichever is less. However client should ideally get his inventory fully insured in order to tackle future uncertainties.
@@AnkushJain Thank u much sir. If possible then make a video for Insurance related points.
@@vimleshkumar-br2jn ok noted.
Sir,
In previous videos you mentioned that working capital finance is given only for 1 operating cycle so for eg. If the operating cycle is 3 months then bank finance only for 1 operating cycle and how rest 3 operating cycles are financed.Given that cc/of/dod is for 12 months and wc is given for 1 operating cycle i e. 3 months in my example then how rest 3 operating cycles get financed.Sir,please help me to understand working capital finance with respect to operating cycles in a year.
Pl watch lecture no. 1 and 2 for understanding this concept
CC and OD are for 12 months but working capital finance is given only for 1 operating cycle was mentioned earlier.Have gone through lec 1 and 2.
Or cc/OD is assessed based on 1 operating cycle e.g 3 months but facility is given for all 4 operating cycles.
Yes 12 months is the validity the loan amount eligibility is for one cycle only
Sir,
Pls correct me if am wrong.
Bank gives money only for 1st operating cycle and cash generated from 1st operating cycle is used to invest in subsequent operating cycle s.
You are correct but pl understand that the cash generated from 1st cycle also include cash coming from limit funded by us.. so that also need to be taken forward to next cycle
Sir ,MMG loan ka video nahi mil raha ha pls suggest
MMG loan?
@@AnkushJain Sir ,Mid Market loan ,like ticket size has 5 cr to 500 cr
Kon sa topic dekhna hai usmein
Sir, for OD against property limits, is stock audit conducted for say limits above 5 cr?
Although not required but few bank still stipulate it
Sir what are basel norms
Inke baare mein kbhi study nhi Kiya
Sir cc limit me CMA data banate hai
Yes har case mein bnta hai
Sir when is third mpbf method used
Which one? Third method of tandon committee?
@@AnkushJain yes sir
@@ananyasrivastava04 we don't use it
199 pay per online training milti hai
Separate individual training nahi hai.. kuch high end videos daali hain, 50+ daal Chuka hu already.. to unka access milega
Ok
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Sir ,If od limit is 75 lakh as per last SL. And this year the team is having a discussion to give 35 in CTL And rest of the amount in Od ,so what will be the reasons for that and the benefit for the bank as well.
Please explain few important points 🙏🙏
CTL?
@@AnkushJain yes sir CTL
I mean what is full form of CTL?
@AnkushJain no sir full form I know.
I need to know the reason r
That , on what basis we are changing the facility from OD of 75 lakh to CTL of 35 Lakh and rest 40 Lakh will be kept in OD Facility.
I hope I am clear with my query?
Yeah I can explain but just tell me whether CTL is a term loan or what?
Sir please tell the condition which are mentioned in the Sanction Letter are put according to cm choice or is there any RBI guidelines in case of any facility I.e. OD, CC STL or WCDL.
Special conditions are put by credit managers while standard conditions are as per banks internal legal norms and rbi guidelines
@@AnkushJain oky sir
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Sir, DLOD revolving facility ha ya Non-revolving ??
Revolving
Sir, If a customer has taken DOD facilities, then how do we obligate in LE?
LE?
@@AnkushJain loan Elegbility..
Monthly drops are your principle repayments. So you can use them accordingly
Thanks Sir for replying so promplty for every querry. 1 more question, do you know are there any list of exceptional transactions that can't occur on Sundays and may indicate as red flags for banks.
If you have any idea. Please comment at your convenient available time.
Idea is to check whether client has submitted any fake bank statement to us or not. Online banking transactions happen 24/7 and therefore the transactions like DD making, cheque encashment which can happen in branch only need to cross verify. Sometimes it happen that there is holiday in one state but normal working day in another
@@AnkushJain Understood. Thank you Sir. Highly appreciated for your prompt reply. 😊
Thank you
Wire Transfer, NEFT, Loan payments, Salary payments, Insurance, Bank charges, cheque disbursement say above 2 lakhs, transactions converted into EMI
Can these transactions occur on Sundays?
Or if you can add such more transactions that need bank confirmation and cant occur on Sundays.
@@Bujhotohjane NEFT is allowed 24/7 as per batch. However other transactions should not happen on public holiday.
Sir, OD limit ka Drawing power se koi relation hota h kya??
No
Ha vai..it's almost same to cc
LC for creditors considered?
Yes
Sir, upto which year projected bal. Sheet is required while renewing Cash credit...?
Let's say the borrower comes now and says .." sir, please renew my CC limit"
And I say to him "please, bring These docs
1) audited bal. Sheet of 31/03/2023
2) estimate bal. Sheet of 31/03/2023
3) projected bal. Sheet of 31/03/2024
Sir, Is what I asked for from the borrower right?
Please let me know
In private sector, we don't ask from client for future balance sheets. We usually ask them about sales, profitability projections along with present working capital cycle. Thereafter projections are framed accordingly by us
@@AnkushJain ok sir.. thanks
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Also if a fraudster has write a cheque on 25-10-2021 of $4000 from 1
One account(available balance $1000)to another bank account(AB:$500). Then how these tranx reflect in bank statement on 25-10-2021
Sorry couldn't get, this cheque will get bounced due to balance not sufficient.
In some banks cheque clears in 2-3 days, so fraudsters take advantage of this and do check kiting. Actaully, I read this theoretically. I wanted to know if this fraud scheme happens in India, if yes, then is there any way to detect these instances by analyzing bank statements?
Can you explain kiting word? I may have heard about this transactions in some different way
@@AnkushJain Check kiting is the deliberate issuance of a check for which there is not sufficient cash to pay the stated amount. The mechanics of this fraud scheme are as follows:
Write a check for which there is not sufficient cash in the payer's account.
Create a checking account at a different bank.
Deposit the fraudulent check in the checking account that was just opened.
Withdraw the funds from the new checking account.
This fraud reduced outside India. But still happens in india as cheque clearnce takes time in some banks in India due to diff reasons.
These transactions may happen. In order to give effect to these, the individual must have opened too many accounts across different banks. There could be some ways to identify these:
1. The banks with whom client have defaulted by withdrawing the amounts, must have reported him as fraud in RBI data base. Therefore this should reflect in internal dedupe checks of the borrower.
2. Check the balance sheet cash and bank details and check the bank names appearing in the list, cross check the statements and find cheque bouncing etc
3. Do Google check in detail of the borrower and find if any news or case is running against the borrower.
4. Such persons open account frequently. Check the account opening date of the borrower account, if it is latest then ask him where was he banking from last 2-3 years. Cross check the details and ask for statements of last 1 year evidencing most of his business transactions. Further cross check the parties from whom he is receiving payments from Google and relate them to his business model
Sir bank will give temporary overdrafts naa sir for shorter term on 30 to 90 days in that also their will two types naa sir intra and inter tod ; sir could you explain difference
In practical world will banks provide short term overdraft for that shorter period
I will explain it in separate lecture
Thanks sir
Suppose a client has availed cash credit facility and before expiry of the limits some amount is outstanding. Bank has renewed the cash credit facility of the borrower. If bank keep renewing the CC limit annually then when will the outstanding amount be repaid. Isn’t the borrower benefiting from it that it just need to pay the interest on utilised amount without paying back principal or outstanding amount. Before renewing facilities banks don’t ask to pay the outstanding amount.
This is the feature of this loan. It is running limit. Never comes down and basically client't debt never gets repaid. Borrower need to be smart and should ideally keep on reducing the limit in timely intervals itself
Hello Sir, I wanted to know signs of Check Kiting. Like how to detect signs of check kiting in a bank statement?
Kiting?
no clear explanation
Hi Rajkumar, can you share your queries, i will try to address them
Well explained 👍
Thank you
Thank you sir 💐
Your welcome