Answer-On the basis of purpose, how does a Cash Credit (CC) facility primarily differ from an Overdraft (OD...

The purpose of a Cash Credit facility is to meet the short-term cash needs of a business, mainly to purchase current assets. In contrast, the Overdraft facility is mainly for non-business and personal needs of an existing customer.

Question

On the basis of purpose, how does a Cash Credit (C

C facility primarily differ from an Overdraft (O
D facility?

A Cash Credit is meant for capital asset procurement, whereas Overdraft is meant for international trade.

B Cash Credit is mainly for working capital requirements to purchase current assets, while Overdraft is mainly for non-business and personal needs of a customer.

C Cash Credit is issued exclusively for fixed-term infrastructure projects, while Overdraft is strictly for financing receivables.

D Cash Credit is designed for personal loans, whereas Overdraft is used exclusively to park corporate excess funds.

E Cash Credit is tailored for government infrastructure bonds, while Overdraft is meant only for microfinance institutions.

Practice Next