Credit Monitoring Arrangement Data or CMA Data is necessary and required for Project Loans, Term Loans and Working Capital Limits as prescribed by the RBI. According to the regulation under RBI, the Company needs to provide the CMA Data Report for getting the bank loan every year. Moreover, the Credit Monitoring Arrangement Data is a detailed analysis borrower of working capital management. The purpose of the CMA Data statement is to ensure the effective use of funds provided to the firm. The financial aid is provided by the banks based on the careful evaluation of the CMA Data Report.
There are 7 statements which are contained in the CMA Data. This helps the bankers in their evaluation. These are mentioned down below:
It is very much particular about the present limits & proposed limits. Thus, it demonstrates both Fund and Non-fund based limits of the borrower.
The Operating Statement also is known as the Profit and loss account statement, is one in which the bank evaluates the performance of the organisation. The CMA Data is also helpful in knowing the revenue cycle for the payment of the expenses.
The CMA data balance sheet determines the financial position of the Company. It answers questions to the banks such as, whether the Company is sound or not? Does Company has assets on debt or owned, etc. Thus the CMA Data comprised of 2 years of audited balance sheets along with the 3 years projected balance sheet.
The Data also tells about the Cash flow statement of the Company. This would mean that the banks would be able to evaluate and verify the liquidity of the Company.
The Changes in the working capital report is the report which helps in understanding the changes in current assets and liabilities. This report also helps us to know the short term solvency of the Company. The organisation cannot misuse its long term resources if it has the required money which is enough to pay current liabilities.
The banks are to be provided with the Ratio analysis.
The banks look after the amount which the Company is looking out for borrowing. This is called the Maximum Permissible Bank Finance (MPBF) working. It must not exceed 75% of working capital or 20% of Sales.
The following are the documents which are required for CMA Data Report:
Audited Financials of the last two years
Latest Sanction letter if there has been a renewal
Provisional Financial for the current year