Cash Credit, Overdraft, Demand loan

Cash Credit, Overdraft, and Demand Loan are different types of borrowing facilities offered by banks and financial institutions.

Cash Credit: Cash Credit is a type of loan facility offered by banks to businesses that allows them to withdraw funds up to a certain limit against their current assets, such as stock, raw materials, or finished goods. It is a short-term loan facility that can be availed of for a period of up to one year. The interest rate charged on cash credit is generally higher than other types of loans.

Overdraft: An overdraft facility allows an account holder to withdraw more money than they have in their account, up to a certain limit, without having to seek prior approval from the bank. Overdrafts are usually granted to individuals or businesses with a good credit history, and interest is charged on the amount borrowed. Overdrafts are generally considered to be short-term borrowing facilities.

Demand Loan: A demand loan is a type of loan facility that is granted by the bank to the borrower, and the borrower can repay it at any time without any prepayment penalty. Demand loans are typically used to meet short-term financial needs, such as for working capital, inventory purchases, or other business expenses. The interest rate charged on a demand loan is generally higher than other types of loans because of the flexibility offered to the borrower to repay the loan at any time.

In summary, Cash Credit, Overdraft, and Demand Loan are all short-term loan facilities that allow businesses and individuals to borrow money for their financial needs. However, the terms and conditions of each facility differ, and it is important to understand these differences when choosing the right borrowing option.