What is a cash credit account?

Cash Credit account is a type of short-term loan provided to businesses by the banks to maintain the liquidity of the cash flow in the business. It is a form of working capital loan that is usually availed by business corporations. The businesses are allowed with this credit over their current account balance for a period of time. Businesses are allowed to borrow amount above their account balance up to the permissible borrowing limit. The bank will charge interest as per its guidelines and the terms and conditions agreed between the borrower and the lender on the amounts withdrawn, not on the entire borrowing limit.