Credit Monitoring Arrangement (CMA) data is the set of historical and projected financial statements, ratios and working-capital assessments that banks in India use to evaluate working-capital and term-loan proposals. This guide walks through preparing it yourself or with your CA.
Step 1: Know what you are asking for
- Decide the facility: cash credit/overdraft for working capital, a term loan for assets, or both.
- Estimate the amount. For working capital, start from your cash conversion cycle and projected sales.
Step 2: Collect the documents
- Audited financial statements for the last two or three years.
- Provisional financials for the current year (trial balance to date).
- GST returns and income-tax returns matching those years.
- Debtor and creditor ageing, stock statement.
- Bank statements for 6–12 months, existing loan sanction letters and repayment schedules.
- KYC of the business and promoters.
Step 3: Reconcile before you project
Turnover in the financial statements, GST returns and ITR should reconcile; differences need an explanation. Clear suspense balances and old debtors.
Step 4: Build projections
- Project sales for the next 2–5 years with reasoning (capacity, orders, market).
- Project gross margin and expenses based on history.
- Project working-capital items using days: receivable, inventory and payable days.
- Add the proposed loan and its repayment.
Step 5: Fill the CMA forms
CMA data is usually presented in standard formats: particulars of existing and proposed limits, operating statement, analysis of balance sheet, comparative statement of current assets and liabilities, computation of maximum permissible bank finance (MPBF), and fund flow. Your bank may have its own template.
Step 6: Check the ratios
- Current ratio, DSCR, TOL/TNW, interest coverage and debtor days. See our article on the five ratios your banker checks.
Step 7: Assemble and submit
Put together a short covering note: the business, why you need the facility, how it will be repaid, and the key numbers.
