Bank Credit & CMA Report Preparation

CMA stands for Credit Monitoring Arrangement. Banks require a CMA Data Report for working capital and term loan facilities — typically for fund-based limits above Rs 2 crore — as part of the credit appraisal process under RBI guidelines on assessment of working capital requirements. The report standardises five years of financials (two audited actuals, current estimate, two projections) so the lender's credit committee can assess cash flow adequacy and repayment capacity in a consistent format.

A standard CMA includes the Operating Statement, Balance Sheet Analysis, Current Assets and Liabilities comparison, and Maximum Permissible Bank Finance (MPBF) computed under either the Tandon Committee First or Second Method of Lending. Key ratios tracked are: Current Ratio (minimum 1.33 under Tandon Method II for MPBF), Debt-Equity Ratio, Debt Service Coverage Ratio (minimum 1.25-1.50 for most term lending), and Interest Coverage Ratio. The projection assumptions must reconcile with audited accounts filed under Section 137 of CA 2013 and income disclosed in ITR filings under Section 263 of ITA 2025.

Banks treat CA-certified CMA data as materially more credible during appraisal, and sanction letters for limits above Rs 5 crore typically require a CA certificate. The statutory auditor's signed audited accounts (under SA 700) form the base for historical years; projections carry a CA or management certificate. Projections that conflict with filed GST returns (GSTR-1 and GSTR-3B under Section 37 and Section 39 of CGST Act 2017) or ITR data are flagged by underwriters and can stall sanction.

You need: last 2-3 years audited Balance Sheets and P&L (statutory auditor signed), ITR acknowledgements for those years, current year provisional accounts, GSTR-1 and GSTR-3B for the last 12 months, a list of existing borrowings with outstanding balances (Form 26AS or liability schedule from existing sanction letters), and a management note on business projections for 2 years. For companies under CA 2013, board-approved projections from the finance committee strengthen the credit file.

The most common rejection triggers are: DSCR below the lender threshold (typically 1.25), Current Ratio below 1.33 under the Tandon norm, projection assumptions not supported by the trailing 2 years of GSTR-1 turnover data, or the promoter group holding director disqualifications under Section 164(2) of CA 2013. We identify weak ratios before submission and recommend working capital restructuring or phased drawdown to present a defensible file to the credit committee.