Difference between cash credit. And overdraft

Question

Accepted Answer

Cash credit is a loan given against inventory or receivables, while overdraft is a facility to withdraw more than the available balance.

Cash credit is a short-term loan given to businesses to meet their working capital needs.
It is secured against inventory or receivables.
Interest is charged only on the amount utilized.
Overdraft is a facility given to account holders to withdraw more than the available balance in their account.
It is an unsecured facility and interest is charged on the amount utilized.
Overdraft is usually given to individuals for personal use, while cash credit is given to businesses.
Example of cash credit: A textile company taking a loan against its inventory of raw materials and finished goods.
Example of overdraft: An individual withdrawing more than the available balance in their savings account.

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