What is the Difference Between Bank OCC A/C and Bank OD A/C?
🆚 Go to Comparative Table 🆚The main difference between Bank OCC A/C and Bank OD A/C lies in their purpose and the way they function:
Bank OCC A/C (Open Cash Credit Account):
- Applicable to SME (Small and Medium Enterprise) entrepreneurs.
- Allows the account holder to have cash credit facility against their stocks and receivables.
- The purpose of the loan is to meet the shortfall in working capital of the SME.
- The limit of drawing is reviewed every year and may be extended depending on the condition of the SME.
- Different banks have different criteria to assess the limit of an OCC account, which may include turnover, MPBF (Maximum Permissible Bank Finance), or cash budget systems.
- Drawings under OCC account are not unsecured; they may require attaching stocks, receivables, land, or machinery as collateral.
Bank OD A/C (Overdraft Account):
- A current account with the facility of overdraft.
- Allows the account holder to withdraw funds beyond their account balance, up to a pre-approved limit.
- In some banks, this facility is available only upon request through an application by the account holder.
- The overdraft limit is usually reviewed periodically, and the account holder may be required to pay interest on the amount overdrawn.
In summary, a Bank OCC A/C is designed to provide cash credit facilities to SME entrepreneurs against their stocks and receivables, while a Bank OD A/C is a current account with an overdraft facility that allows the account holder to withdraw funds in excess of their account balance.
Comparative Table: Bank OCC A/C vs Bank OD A/C
The search results provided do not directly address the difference between Bank OCC (Overdraft) A/C and Bank OD (Overdraft) A/C. However, I can provide a general understanding of overdraft and cash credit based on the available information.
Overdraft and cash credit are both financial services that allow account holders to access more funds than they have in their accounts. Here are the main differences between the two:
| Overdraft | Cash Credit |
|---|---|
| Allows account holders to briefly have a negative balance without incurring a large overdraft fee. | Typically requires collateral and is commonly renewed annually for business customers. |
| Overdraft protection comes in several forms and is reviewed annually, with access granted or revoked based on the account holder's financial standing. | Cash credit is granted based on the borrower's ability to provide collateral and is usually linked to a large account at the financial institution. |
| Overdrafts are generally considered a short-term credit solution for account holders who need temporary access to additional funds. | Cash credit is mainly used by businesses to address liquidity problems and ensure access to capital when needed. |
Please note that these differences are general and may not apply to specific bank accounts or financial institutions. It is always best to consult with your bank for detailed information on their overdraft and cash credit services.
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