Every term is defined twice: once the way a filing would put it, and once the way somebody would explain it to you across a table. The second one is usually the one that sticks.
Showing 3 terms
A sanctioned borrowing ceiling for day-to-day operations — cash credit, overdraft or a demand loan — typically reviewable periodically and repayable on demand.
A permission to borrow rather than a promise of funding, and it never appears on a repayment calendar because it has no maturity. It is worth least on the day it is needed most.
The amount actually available under a working capital limit at a point in time, recomputed against stock and receivables after prescribed margins.
It is why a sanctioned limit contracts exactly when the business contracts. The ceiling stays where it was and the money that can be drawn against it falls with the inventory and the debtors.
A facility the lender is contractually obliged to fund for a defined period, as opposed to a limit that is reviewable and repayable on demand.
The distinction decides whether an undrawn limit belongs in a liquidity schedule at all. Most ordinary working capital limits in India are not committed, and a company that has arranged one will say so.