Q.A Cash Credit facility is normally sanctioned by a bank against the security of: (A) A Fixed Deposit Receipt only
(B) Stock-in-trade or book debts
(C) Personal guarantee of the directors only
(D) No security is required

Cash Credit is specifically designed to finance a business's working capital, so the security a bank takes for it is naturally the very stock and receivables that working capital funds. …

A Cash Credit account is a running borrowing facility a bank sanctions against the security of a company's stock-in-trade, raw materials, or book debts, usually by way of hypothecation, with the limit tied to the value of that security.

(A) A Fixed Deposit Receipt is the typical security for an Overdraft, not for Cash Credit — incorrect here.

(B) Stock-in-trade or book debts is exactly the security Cash Credit is sanctioned against — correct. …

Students sometimes mix up Overdraft's typical security (a Fixed Deposit) with Cash Credit's typical security (stock-in-trade/book debts) — the two facilities are secure …