—Guide
CMA Data for Bank Loans: What It Contains and How Banks Assess Working Capital
What CMA data is, the schedules it contains, how banks use it to assess working capital limits, and the ratios they look at.
When a business applies for or renews a working capital facility, banks usually ask for CMA data — financial information in the Credit Monitoring Arrangement format. It's the standard way Indian banks assess how much working capital a business needs and can support. This guide explains it.
What CMA Data Contains
CMA data typically includes, for past years and projected years:
- Particulars of existing and proposed credit limits.
- An operating statement: sales, costs and profit.
- An analysis of the balance sheet.
- A comparative statement of current assets and current liabilities.
- A computation of the permissible bank finance.
- A fund flow statement.
How Banks Assess Working Capital
Banks look at the working capital gap — current assets less current liabilities other than bank borrowings — and require the business to fund a margin from its own resources. The rest can be funded by the bank. For smaller borrowers, banks may instead use simpler turnover-based methods. Each bank applies its own policies.
Ratios Banks Watch
- Current ratio: current assets to current liabilities, for liquidity.
- Debt-equity and total outside liabilities to tangible net worth, for leverage.
- Debt service coverage ratio, for term loans.
- Holding periods: how long stock and receivables are held, and payables are paid.
- Profitability and growth trends.
Projections
Projections should tie to historical performance. Banks are wary of sudden jumps in sales or margins without explanation, and may cap projections at what history supports.
After Sanction
Working capital limits are usually reviewed annually, with updated CMA data and audited accounts. Periodic stock statements determine drawing power in between.
Tips
- Base projections on actual trends and real orders.
- Explain any big changes in sales, margins or holding periods.
- Keep stock and receivable records clean — they drive drawing power.
- Prepare CMA data before renewal is due, not after.
Getting Help
Think Filing prepares CMA data and supports businesses through working capital appraisal and renewals.