Working capital loan in Chennai for ₹5 crore+ business files

Should I choose cash credit, OD against property or a short working-capital loan in Chennai?

Match the facility to what actually ties up your money.

When this holds: your stock and debtor statements are reliable, GST matches the books, and the property title is clean. When it fails: Cash credit without stock stops most cash draws. Overdraft on a stock-heavy business hides the real cycle from the bank and can lead to a cut at renewal.

How is drawing power on a cash credit limit worked out?

Drawing power (DP) is recalculated every time you file a stock statement. The method and margins are in your sanction letter; the common pattern is:

1. Stock: total stock, less slow-moving or ineligible items, less unpaid trade creditors, less the stock margin.
2. Receivables: debtors within the age limit (often 90 days), less related-party and disputed bills, less the receivables margin.
3. DP = stock DP + receivables DP. You can draw the lower of DP and the sanctioned limit.

See the worked example further down for sample numbers.

Which bank can run my OD or current account once my limits cross ₹10 crore?

This rule matters for almost every ₹5 crore+ borrower that banks with more than one lender. Under a new RBI rule for commercial banks (from 1 April 2026; amendment dated 11 December 2025):

• Cash credit accounts are not restricted. Any bank may give you a CC as your needs require.
• Total loans below ₹10 crore (all cash limits and non-cash limits like bank promises across banks — total exposure): any bank may keep your current or OD account.
• Total loans of ₹10 crore or more: a bank may keep your current or OD account only if it has at least 10% of the banking system’s total cash loans to you . If fewer than two banks qualify, the two banks with the largest share of those loans may.
• Every other bank may keep only a collection account. Money credited there must be sent to your designated CC, current or OD account within two working days.
• Banks check eligibility at least every half-year. If a bank stops qualifying, it must tell you within a month, and the account must be converted or closed within three months.

What to do: before adding a new lender, map which banks will hold at least 10% of your total exposure, and route customer collections to an account you are allowed to operate. A ₹2 crore OD with a fourth bank on ₹40 crore of total exposure (5% share) is exactly the case that now ends up as a collection account.

Does the 60:40 fixed working-capital loan rule apply to my business?

Only for large borrowers. If your total cash working-capital limit across all banks is ₹150 crore or more (banks call this the total cash working-capital limit), at least 60% of that approved cash limit (including short top-ups) must be drawn as a working capital loan (WCDL), and only the balance as cash credit or overdraft. The split is worked out after excluding export credit (pre- and post-shipment) and inland bills limits, and it is kept at each bank’s level, including when a group of banks lend together (a consortium).

Illustrative: a Chennai group with a ₹200 crore fund-based limit, of which ₹30 crore is export credit, splits the remaining ₹170 crore: at least ₹102 crore as short working-capital loan (WCDL) and up to ₹68 crore as cash credit or overdraft. Below ₹150 crore the rule does not apply, though many banks still offer a short working-capital loan part voluntarily.

How do Chennai banks decide a ₹5 crore+ working capital limit?

At this size most banks set the limit from the operating cycle (how long money sits in stock and unpaid bills), not a flat turnover percentage:

• Projected turnover that agrees with GST returns and bank credits.
• Holding periods: raw material, work in progress, finished goods and debtor days, compared with your own history and your sector.
• Creditor credit you actually receive, and the margin you bring from long-term funds.
• CMA data (projected balance sheet, P&L and fund flow) for the assessment, with a cash budget for seasonal, project or contract businesses.

Step-by-step method: how banks assess CC/OD limits. If you are property-rich but stock-light, a loan against property or OD against property may serve better than forcing a stock-based CC.

What do banks check before renewing or enhancing a CC/OD limit?

• Audited financials (and provisional figures when the audit is late).
• Stock and debtor statements filed every month, on time, matching the books.
• Utilisation and overdrawal history; cheque returns.
• Sales routed through the limit-holding bank, not diverted elsewhere.
• Sanction-condition compliance: insurance, stock audit remarks, unit inspection, property valuation for OD collateral.
• No diversion of working capital to property or capex.

Renewal help: working capital renewal & compliance.

Do you charge for working capital advisory?

You may pay us a fee. We tell you the amount in writing before we start. Working capital facilities usually have no lender payout, so this is normally a fee case. We never publish a fee amount; it is set per mandate and written down first.

Why use a working capital loan consultant instead of a loan agent?

A loan agent usually sources for the lenders it is tied to. Your limit depends on how the assessment is prepared, how clean your stock and debtor statements are, and (since April 2026) which bank holds which account. A consultant prepares that case with you, checks it the way a bank officer who decides loans would, and only then approaches lenders. Compare roles on loan agent, DSA or advisor in Chennai.

Chennai corridors and operating-cycle patterns

• Parrys, George Town, Purasawalkam: trading cycles; CC against stock and debtors; OD against commercial property.
• Ambattur, Guindy, Thirumazhisai, Sriperumbudur, Oragadam: manufacturing; CC plus LAP plus LC/BG packages, often across two or three banks (watch the ₹10 crore account rule).
• OMR and Guindy offices: service firms; OD against property or LAP; sometimes LRD on a leased building.
• Export-linked units: packing credit and post-shipment finance, which sit outside the 60:40 split.

Worked example (illustrative numbers)

An Ambattur auto-components manufacturer has a ₹8 crore cash credit and a ₹1.5 crore bank-guarantee (promise-letter) limit with Bank A, and a ₹4 crore OD against its factory with Bank B. It also keeps an old current account with Bank C, which has given it no limit.

Drawing power this month (Bank A, margins as in its sanction letter):

• Stock: ₹9.0 crore as per statement, less ₹0.5 crore slow-moving stock, less ₹2.5 crore unpaid trade creditors = ₹6.0 crore. Less the 25% stock margin = ₹4.5 crore.
• Debtors: ₹6.0 crore as per statement, less ₹1.0 crore over 90 days = ₹5.0 crore. Less the 40% receivables margin = ₹3.0 crore.
• Drawing power: ₹4.5 crore + ₹3.0 crore = ₹7.5 crore, against an ₹8 crore sanctioned limit.

The firm can draw ₹7.5 crore, not ₹8 crore: ₹50 lakh of the limit is idle until old debtors are collected or eligible stock rises.

Account rule check: total loans at banks (banking exposure) is ₹8 + ₹1.5 + ₹4 = ₹13.5 crore, so the ₹10 crore rule applies. Bank A holds about 70% and Bank B about 30%, so both may run current or OD accounts. Bank C holds 0%, so it may keep only a collection account, and anything credited there must move to the designated account within two working days. Customers paying into Bank C should be redirected to Bank A.

The numbers and margins are sample only. Your bank’s letter has the real rules.