CMA Report Preperation

A Credit Monitoring Arrangement (CMA) report is a crucial financial document that provides past, present, and projected figures in a prescribed format set by RBI, along with necessary financial analysis and ratios. This report helps Bankers and Financial Analysts to evaluate the financial health of a business. To understand the flow and application of funds in a business, all loan applicants must provide a realistic CMA report as requested by bankers. It is essential to ensure that the assumptions used in the CMA report are both viable and realistic since the report is based on various assumptions.
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Mayank Wadhera

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Overview of CMA Report Preperation

A CMA report is a vital evaluation of a business’s working capital needs, which is considered by bankers when funding those needs. To grant working capital, such as Cash Credit against Stock and/or Debtors balance, bankers consider various factors, including industry-standard ratios that must be in place for their comfort. The Credit Monitoring Arrangement (CMA) report, also known as the Credit Monitoring Report, is a comprehensive financial document that provides a projected and past performance overview of a business. It includes all necessary financial ratios and metrics required to assess the financial health of a business, making it a crucial report for financial analysts and bankers.
Most banks and financial institutions require a professionally prepared CMA report from loan applicants to understand the flow and application of funds in their business.

  • A well-prepared CMA report can increase the chances of obtaining a bank loan, making it a valuable asset for businesses.
  • Under the CMA, banks are allowed to sanction credit proposals for large borrowers after a detailed analysis of their past performance.
  • In addition, banks are required to submit large credit proposals with working capital limits of Rs. 500 lakhs (5 crores) and above, and/or term loans exceeding Rs. 200 lakhs (2 crores) to the Reserve Bank of India for post-sanction scrutiny.

Advantages of CMA Report Preperation

Helps Determine Working Capital Needs It helps businesses determine their exact working capital requirements and assists bankers in assessing their creditworthiness.
Offers Financial Clarity The CMA report provides an accurate picture of a business’s financial health and helps identify areas that need improvement. This report enables businesses to make informed decisions about investments, growth, and expansion plans.
Simplifies the Loan Application Process CMA reports are widely used by bankers and financial institutions to evaluate a business’s creditworthiness. By presenting a comprehensive and realistic CMA report, businesses can simplify the loan application process and increase their chances of getting their loan application approved.
Facilitates Better Negotiations The CMA report provides a detailed analysis of a business’s financials, enabling businesses to negotiate better loan terms, interest rates, and repayment schedules.

Registration Process

Step 1: To prepare a viable and realistic CMA data report online, it’s essential to have a thorough understanding of your business. At Legal Suvidha, our Compliance Manager will reach out to you to gain a comprehensive understanding of your business, taking into account all its unique aspects.

Step 2: After understanding your business, our Compliance Manager will prepare a draft CMA report based on various assumptions such as sales growth, expense projections, cash inflow and outflows, and assets and liabilities estimations.

Step 3: Once the draft CMA report is ready, our Compliance Manager will discuss it with you. After any required iterations, you will receive the final CMA report, which is ready to be submitted to your bank. We provide up to two iterations to ensure any queries from bankers are resolved.

Required Documents

1. Last two years’ audited financial statements newest sanction letter (in case of renewal)

2. Current-year Provisional Financial Information

3. Schedule for Repayment of Term Loans ( if any)

4.Specifications of any proposed improvements, together with their terms and conditions

FAQ's CMA Report Preperation :-

The financial report used by lending institutions to evaluate and analyse a company’s financial status prior to financing is called a Credit Monitoring Arrangement, or CMA Data. The Reserve Bank of India has mandated that all banks prepare CMA for lending to large borrowers under the current regulations.
The word “CMA” refers to a prepared report that contains all the relevant financial ratios and measurements to help bankers and financial analysts assess a company’s financial health.
We are all aware that banks must operate their finance operations in accordance with RBI regulations. RBI advises against only basing loan decisions on CMA data. Even Nevertheless, practically all banks are requesting CMA information. Even for modest loans between 4 and 6 lakhs, submitting a CMA report is necessary. The rationale is that by studying data, banks can determine the profitability of projects and the flow of funds (past and planned) from borrowers.
Your chances of securing the loan have increased by producing a CMA data report with the appropriate ratios and a clear explanation of the use of funds.

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3. Process

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