Full Form of OCC:
Open Cash Credit
OCC Full Form is Open Cash Credit. OCC is a banking system or process which grants the companies to utilize money, on a daily basis, to a sanctioned limit. The borrower can apply for sanction of loan to a certain limit. This money gets deposited into the company’s Cash Credit account and the company can draw money regularly from that account. The system of OCC is extremely efficient for organizations involved in business.
A company can apply for the loan. But the bank sanctions loan only if it succeeds to fulfill the required security parameters. Banks usually asks for stocks and receivables as primary security components. Almost every bank does not demand any collateral security for loan sanction up to 10 lakhs Rupees. But if the applied amount is more than 10 lakhs Rupees, the bank may ask for buildings, machineries, tools, fixed assets as collateral security components.
Similarly, co-obligation is not needed in case of loan amounts up to 10 lakhs, but banks usually demand suitable third party guarantee as co-obligation or guarantying component. The amount of sanctioned OCC depends on business turnover, cash budget, stocks as raw materials, finished goods and other relevant components. Usually, these loans are sanctioned at a usually noticed margin rate of 20 to 25% if the security component is stocks, and 30% if the security component is receivables or book debts. The tenor of the loan varies from one bank to the other.
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