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OPERATIONAL ASPECTS OF LOAN ACCOUNTS
What is the purpose of a loan account ledger maintained by a bank?
A loan account ledger records all debits (disbursements, interest, charges) and credits (repayments) to track the outstanding balance and repayment history of a borrower.
What is a 'book debt' in the context of working capital financing?
Receivables owed to borrower by customers for goods sold.
What does 'drawing power' mean in the context of a cash credit account?
Drawing power is the maximum amount a borrower can withdraw from a cash credit account at any point, calculated based on the value of stocks and debtors less prescribed margin.
What is meant by 'drawing power' linked to debtors in a cash credit limit?
Eligible limit based on approved percentage of outstanding debtors.
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