Get alerts on working capital
Working capital finance funds the gap between paying suppliers and collecting from customers. The two common revolving facilities are Cash Credit (CC) and Overdraft (OD): the bank sanctions a limit, you draw and repay within it, and interest accrues only on what you actually use — not the full sanctioned limit.
The rate is set off the same EBLR/MCLR benchmark as a term loan (the ladder below is the floor). What differs is sizing: your drawing power is computed from current assets — stock and receivables — net of creditors and a margin, so the limit flexes with your operating cycle.
The bank EBLR floor today
| Bank | EBLR |
|---|---|
| RBL Banklowest | 6.00% |
| ICICI Bank | 7.50% |
| Kotak Mahindra Bank | 7.60% |
| HDFC Bank | 7.75% |
| IndusInd Bank | 7.75% |
| Bank of Baroda | 7.90% |
| Canara Bank | 8.00% |
| Indian Overseas Bank | 8.10% |
| Punjab National Bank | 8.10% |
| State Bank of India | 8.15% |
| Central Bank of India | 8.25% |
| UCO Bank | 8.30% |
RBI repo 5.25%. EBLR is the repo-linked floor each bank lends off; your rate is this plus a spread for your profile. Indicative, refreshed daily — confirm with the bank.
Full ladder with MCLR tenors on the bank loan-rate page.
How working capital is priced and sized
- Interest accrues on the utilised balance, not the sanctioned limit — an idle CC/OD costs little beyond charges.
- The rate is EBLR/MCLR + spread, same benchmark family as term loans (see the ladder below).
- Drawing power = (stock + receivables − creditors) × (1 − margin). It is re-assessed periodically from your stock statements.
- A longer cash-conversion cycle ties up more working capital — shortening receivables or stretching payables reduces the limit you need.
Work the numbers for your own business.
Drawing-power calculator →Questions, answered
- What is the difference between cash credit and a term loan?
- Cash credit is a revolving working-capital limit you draw and repay within, paying interest only on the utilised amount; a term loan is a one-time disbursal repaid on a fixed EMI schedule. CC funds the operating cycle, a term loan funds an asset or expansion.
- How is the cash credit / CC limit calculated?
- Banks compute drawing power from your current assets — inventory plus receivables, less creditors, after a margin — so the limit moves with your stock and debtor levels. Our drawing-power calculator estimates it from your figures.
- What interest rate applies to working capital loans?
- The same repo-linked EBLR (or MCLR) benchmark as bank term loans, plus a spread for your risk — see the bank ladder on this page. You pay it only on the balance you actually draw.
- Cash credit vs overdraft — which should a business use?
- Cash credit is secured against current assets (stock/receivables) and suits inventory-heavy trading and manufacturing; an overdraft is often against fixed deposits, property or as a clean limit and suits shorter, lumpier gaps. Pricing is similar; the security and assessment differ.
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