Bank Credit & CMA Report Preparation

SARFAESI Act, 2002: Sections 13(2)-13(4) form the statutory framework governing enforcement of security interest by secured creditors (banks/FIs) once an account is classified as a non-performing asset — the backdrop against which lenders assess credit risk when appraising CMA (Credit Monitoring Arrangement) data. Section 13(2) requires a 60-day demand notice to the borrower before enforcement action; Section 13(4)(a)-(d) sets out the enforcement measures available thereafter (taking possession of secured assets, sale/lease/assignment, appointment of a manager, and recovery from receivables) if the borrower fails to discharge the liability within the notice period; Section 14(1) permits the secured creditor to seek assistance from the Chief Metropolitan Magistrate or District Magistrate for taking physical possession, as affirmed in Standard Chartered Bank v. Noble Kumar, (2013) 9 SCC 620. A CMA report — covering operating statement, balance sheet, fund flow and MPBF working-capital assessment — is the core underwriting document banks rely on to project a borrower's repayment capacity and structure facility limits, directly bearing on whether an account stays performing or migrates toward the SARFAESI enforcement track above. Companies availing secured bank credit should also note Section 180(1)(c) of the Companies Act, 2013: board borrowing beyond the aggregate of paid-up capital, free reserves and securities premium requires a shareholder special resolution and filing of Form MGT-14 with the Registrar of Companies within 30 days — a threshold lenders typically verify before sanctioning enhanced credit lines.

The CMA report — named after the Cost and Management Accountancy profession that popularised the format — is the credit appraisal document banks in India use to assess working capital and term loan proposals. It presents the borrower's past performance and future projections in the bank's prescribed format: operating statements, production and sales data, working capital requirements, current assets and liabilities, and the fund-flow statement that shows how the loan will be repaid. Banks require it because RBI's regulatory framework under the Banking Regulation Act 1949 — Sections 21 and 35A give the RBI the power to control and direct the advances policies of banks — pushes credit decisions onto documented, standardised appraisals rather than relationship calls.

The CMA report is where a loan application is won or lost before the banker even meets you. The working capital assessment is built from your stock levels, receivables, creditors and cash cycles — every number in the CMA must tie to your books, your tax returns and your GST filings, because the bank will check. A report that overstates stock or understates creditors fails on the first verification; one that is internally consistent and conservatively projected gets sanctioned.

Applying for credit without a proper CMA — or with one copied from a template — is the most common reason SME loan applications stall or get sanctioned at fractions of what the business needs. Banks are under their own compliance pressure under the BR Act framework, and a weak appraisal means a smaller limit, a longer process, or a rejection that goes on the record.

This service is for businesses seeking working capital limits, cash credit, overdraft, or term loans — manufacturers, traders, and service businesses of every size. We prepare the CMA data in your bank's format from your actual books, build the projections conservatively and defensibly, tie the numbers to your GST and income tax records, and hand you a report that makes the banker's job easy.