Bank OCC a/c is a group defined under which group?

By BYJU'S Exam Prep

Updated on: September 25th, 2023

Bank OCC a/c is a group defined under the liability group. An individual can deposit money into a bank using a bank account. The Bank OCC a/c is a subcategory of the liability group. Since the title suggests that the loan already exists and since the loan involves a liability in the books of accounts, the full name of the Bank OCC is Open Cash Credit. Individuals receive loans and credits from the account.

  • An OCC account is a type of bank account that primarily benefits small and medium-sized businesses (SME).
  • A cash credit facility is available to OCC A/C holders against their stocks and receivables. The criteria used by various banks and financial institutions to determine an OCC A/c’s limit vary.
  • The OCC limit is typically determined by taking into account the SME’s turnover.

Open Cash Credit (OCC)

Open Cash Credit, or OCC, is a term that applies to SME business owners. The owner of an OCC account may use a cash credit facility against his or her stocks and receivables. The loan’s objective is to cover the SME’s deficiency in working capital. The criteria used by different banks to determine an OCC account’s limit vary. The OCC limit is typically determined based on the SME’s annual turnover. To determine the limit of such an account, MPBF or a cash budget system may be used in some circumstances.

The amount that can be drawn from an OCC holder depends on the stockpiles of finished goods, unpaid invoices, raw materials, and currently manufactured goods. Drawings on the OCC account are not insecure. Stocks and receivables may need to be associated with the bank as security. There are times when a bank may additionally need collateral in the form of property or equipment. Every year, the drawing limit is reviewed, and depending on the state of the SME, it may be increased.


Bank OCC a/c is a group defined under which group?

Bank OCC a/c is a group defined under liability group. Business owners can access credit from their bank through an open cash credit account without submitting a formal loan application.

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