CC and OD limit estimator
Reviewed 4 November 2026 · Prateesh Nair, BISFIOPS Private Limited
Banks usually size a working-capital limit two ways: from projected turnover and from your current stock and debtors. Enter your figures to see both estimates, how much you could actually draw today, and the headroom over any limit you already have.
- Turnover method: limit = 20% of projected annual turnover (the bank's share of a 25% working-capital need; the borrower brings 5%). Applies to limits up to ₹5 crore.
- Drawing power = (stock + debtors under 90 days) × (1 − margin) − trade creditors. The margin is applied before creditors are subtracted.
- The indicative limit you could draw is the lower of the two.
- Left out: your credit record and CMR, security cover, bank-specific margins and debtor age limits, and existing borrowings. Estimate for planning, not an offer.
Worked example (illustration)
A trader projects ₹2 crore of turnover for the year. The turnover method gives a limit of ₹40 lakh (20% of ₹2 crore). Today the business holds ₹30 lakh of stock and ₹20 lakh of debtors under 90 days, and owes ₹10 lakh to suppliers. At a 25% margin, drawing power is (₹30 lakh + ₹20 lakh) × 75% − ₹10 lakh = ₹27.5 lakh. So even with a ₹40 lakh limit sanctioned, the business can draw about ₹27.5 lakh today. As stock and debtors grow, so does what it can draw, up to ₹40 lakh.
In plain language
Think of the sanctioned limit as the ceiling the bank agrees to, based on how much you sell. Drawing power is how much of that ceiling your stock and debtors cover today. You submit a stock statement, usually every month, and the bank recalculates drawing power from it.
Before you apply, check you meet the usual criteria in CC/OD limit eligibility. To see what the limit will cost once you use it, try the CC/OD interest calculator. Not sure whether you need a CC or an OD? Read CC vs OD.
How banks size a limit
Turnover method. For working-capital limits up to ₹5 crore, RBI guidance asks banks to treat working capital need as 25% of projected annual turnover, finance at least 20% of turnover, and expect the borrower to bring 5% as margin.
Drawing power. What you can draw on any day is capped by your current assets: stock plus debtors (usually only those under 90 days), less a margin the bank keeps — often 25% — less what you owe trade creditors.
CC or OD?
A cash credit limit is secured on stock and debtors and moves with them; you submit stock statements. An overdraft is often secured on property or deposits, with a fixed limit and no stock statements. Both charge interest only on the amount you use.
Questions we are asked
How is a CC limit calculated?
For limits up to ₹5 crore, banks commonly use the turnover method: about 20% of projected annual turnover as bank finance. What you can draw is then capped by drawing power — stock and eligible debtors, less margin, less creditors.
What is drawing power in a CC account?
Drawing power is the amount you can actually withdraw from a cash-credit limit at a given time. It is usually stock plus debtors under 90 days, less the bank's margin, less trade creditors.
What is the difference between CC and OD?
A cash credit limit is secured on stock and debtors and its drawing power moves with them. An overdraft is often secured on property or deposits and has a fixed limit. Both charge interest only on what you use.
Sources: RBI — Master Circular on lending to MSMEs
Written by Prateesh Nair, Director, BISFIOPS Private Limited (CIN U66190MH2026PTC475143), Malad East, Mumbai. General information, not personal advice; lenders decide final terms.