Drawing power.
How much of your working capital limit your stock and debtors actually support.
How drawing power is worked out
Banks let you draw against current assets, less a margin. A common method: (stock − trade creditors) less the stock margin, plus eligible debtors less the debtor margin. You can draw the lower of this figure and your sanctioned limit.
How to use it
- Enter stock, eligible debtors (usually under 90 days old), trade creditors and the sanctioned limit, in ₹ crore.
- Change the margins under More options to match your sanction letter.
- If drawing power falls short of the limit, you are paying for limit you cannot use.
Questions.
Why is my drawing power lower than my limit?
Your stock and debtors, after margins and creditors, do not support the full limit. Some banks also exclude older debtors.
What margins do banks use?
Commonly around 25% on stock and debtors, but your sanction letter sets the exact figures.
Does unused limit cost money?
At some banks, yes: a commitment charge on the unused part. Our cash credit calculator shows the total cost.
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