CC and term loan are meant for specific purposes. Long term assets are supposed to be funded through term loans - Machinery, buildings, etc. Working capital gap is to be funded through cash credits. Generally term loans don’t need much of collateral security since the basic tangible asset is primary security. Cash credits need collateral security almost to the extent of 100% of loan.
Hence if you intend to buy some asset then make sure you take term loan for the same. Please do not buy it from a CC account because that is sure shot recipe for a debt trap. Cash credit can be also converted into a working capital term loan if you are sure of its repayment over a period of time. However, in the present scenario till the future becomes more clear, I wont advise that to be done.
Ranjit Natu is a practising Chartered Accountant and Partner in Taxation & Outsourcing in M/s. Natu & Pathak,Chartered Accountants.
He is also the independent Director of PNG &aSons Limited, GoldenSparrow Finance & Treasury Pvt. Ltd., as well as Penosh Transport Pvt. Ltd. and Penosh Finance Pvt. Ltd. A member of the ICAI since 2003, he has been awarded critical responsibility including appointment by the Maharashtra Government for financial investigation in the Telgi Fake Stamp Paper Scam case as a part of the Special Investigation Team (SIT).
He has been actively involved many social activities more prominently that of Vishwa Hindu Parishad and successfully delivered duties on various responsible positions. He is also one of the conceptualisers and a founder trustee of Niramay, the flagship social service project of VHP, Pune. Besides this , Mr Natu also serves as the first Inter-National President of Hindu Helpline at the moment along side Executive Council member of the Poona District & Metropolitan Badminton Association since many years and currently its Hon. Secretary.
Mr. Natu's impressive dossier also outshines with his earlier poisions as Managing Committee Member of Maharshi Karve Stree Shikshan Sanstha, Managing Committee Member of Shikshan Prasarak Mandali, Trustee on various trusts such as Hindu Helpline (Ahmedabad), Explore Kashi (Ahmedabad), Art &; Culture Council of India (Ahmedabad), Niramay (Pune), Poona District & Metropolitan Badminton Association (Pune) & Janajagaran Prakashan (Pune), Managing Committee Member of Shikshan Prasarak Mandali, and the Founder Secretary of Indo-Israeli Friendship Forum .and Hindavi Swarajya Mahasangh.