Explain cash credit facility allowed by banks to customers.

1 year ago
Banking

A cash credit facility is an arrangement whereby the bank agrees to lend money to the borrower upto a certain limit. The bank put this amount of money to the credit of the borrower.

The borrower draws the money as and when he needs. Interest is charged only on the amount actually drawn and not on the amount placed to the credit of borrower’s account. Cash credit is generally granted on a bond of credit or certain other securities.

Susmita Sah
Jan 16, 2022
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