The cash credit account functions like a current account with cheque book facility. The facility is provided to pledge or hypothecation of stock i.e. raw materials, work in progress, finished goods, etc. or on the guarantee of book debts (debtors) or other collateral security as per banking company norms.
The withdrawing facility provided by the bank in which the person can withdraw amount more than what he holds to his credit, against the hypothecation of stock or any other collateral securitY.
For availing cash credit facility, the borrower must have a cash credit account with the bank.
Cash Credit (CC) is granted against hypothecation of stock and assets such as raw materials, work-in-process, finished goods and stock-in-trade, including stores and spares.