Commercial Applications
Answer
Distinction between Cash Credit and Loan
| S.No. | Basis of Distinction | Cash Credit | Loan |
|---|---|---|---|
| 1. | Nature | It is a revolving credit arrangement. | It is not a revolving arrangement. |
| 2. | Sum | The amount is credited to the bank account; the borrower withdraws as per his needs. | A lump sum amount is paid to the borrower at one time. |
| 3. | Interest | Interest is charged only on the amount actually withdrawn. | Interest is charged on the whole amount sanctioned. |
| 4. | Period | Generally for a longer period. | Granted for a fixed period (short-term or medium-term). |