CMA Data Preparation
For Bank Loan and Working Capital Finance
Seven-statement CMA format, operating cycle and holding period analysis, working capital gap and MPBF computation, fund flow and ratio analysis — prepared in your lender’s template and defended through the appraisal.
Overview
What Is CMA Data?
CMA data is the document your banker actually reads. The rest of the loan file is supporting paper; the credit monitoring arrangement statements are where the assessment is made, where your working capital limit is computed, and where an inconsistency will send the whole application back to you.
CMA data stands for credit monitoring arrangement data — a standardised set of financial statements, historical and projected, that banks use to assess a borrower working capital requirement and repayment capacity. It typically covers two years of audited actuals, the current provisional year, and two to three years of projections.
The format originated with the Reserve Bank of India credit monitoring framework and, although the regulatory requirement has evolved considerably, the structure has persisted because banks find it workable. Most Indian banks still use substantially the same seven statements, with minor variations in their own templates.
What makes CMA data different from ordinary financial statements is that it is forward-looking and formula-driven. The bank does not simply read your projections; it computes your permissible finance from your own numbers using its own norms. Which means the assumptions you put in determine the limit you get out.
N D Savla & Associates prepares CMA data for working capital facilities, cash credit limits, overdraft enhancements and term loan applications across banks and NBFCs. We build the projections from your actual operating cycle rather than reverse-engineering them from the limit you want, which is why the files hold up under credit team questioning. Where a new project needs a full appraisal document instead, that is covered by our project report preparation service.
The Format
What Are the Seven Statements in CMA Data?
The standard format runs to seven linked statements. Each feeds the next, so an error in one propagates through all of them.
| Statement | What It Covers | What the Banker Looks For |
|---|---|---|
| Form I — Existing and proposed limits | Current facilities from all lenders and the limits now sought | Undisclosed borrowings and total exposure |
| Form II — Operating statement | Sales, cost, profitability for two actual and three projected years | Whether the sales growth assumption is credible |
| Form III — Analysis of balance sheet | Assets and liabilities classified over the same five-year span | Trend in current assets and outside liabilities |
| Form IV — Comparative current assets and liabilities | Detailed break-up of working capital components | Holding periods for stock, debtors and creditors |
| Form V — Computation of MPBF | Working capital gap and permissible bank finance | Whether the requested limit exceeds the computed entitlement |
| Form VI — Fund flow statement | Sources and application of funds year on year | Whether long-term funds are financing long-term assets |
| Form VII — Ratio analysis | Current ratio, TOL/TNW, DSCR, turnover ratios | Compliance with the bank internal benchmarks |
Note: the working capital gap is current assets less current liabilities other than bank borrowings. Under the commonly applied second method of lending, the borrower must fund at least 25 percent of current assets from long-term sources, which is what produces a current ratio benchmark of 1.33.
Who It Is For
Who Needs CMA Data?
Any borrower seeking or renewing a working capital facility above the threshold their bank applies — which for most banks means anything beyond a small, fully collateralised limit.
Businesses Applying for a New Cash Credit or Overdraft Limit
A first-time working capital application is assessed almost entirely on the CMA data, because the bank has no borrowing history with you. The holding period assumptions for inventory, receivables and creditors have to be defensible against your own audited accounts, since the credit team will compute them independently and compare.
Existing Borrowers at Annual Renewal
Working capital limits are renewed annually and the renewal file requires fresh CMA data with updated actuals. This is where most disputes arise: last year projections are now visible as actuals, and a large gap between the two undermines the credibility of the new projections. Businesses with disciplined monthly financial reporting and MIS handle renewals far more smoothly because the numbers were tracked all year.
Companies Seeking Limit Enhancement
An enhancement request has to demonstrate that the increased limit is justified by the operating cycle rather than by a cash shortfall. The CMA data must show growth in sales and a corresponding growth in the working capital gap. Where the real problem is stretched creditors or slow collections, the enhancement is usually declined and the underlying issue flagged instead.
Borrowers Refinancing or Shifting Banks
Moving facilities to another lender requires a full fresh appraisal, and the new bank will compare your CMA projections against your filed returns and audited accounts closely. Provisional figures for the current year usually need to be supported by provisional financial statements or certified financial statements from a chartered accountant.
Context
How Has Working Capital Assessment Evolved in India?
The way Indian banks assess working capital has changed fundamentally over five decades, and understanding the sequence explains why the CMA format looks the way it does.
The Tandon and Chore Committees
The Tandon Committee reported in 1974 and established the framework that still shapes the assessment: norms for inventory and receivable holding periods by industry, the concept of the working capital gap, and three methods of lending under which the borrower funds a progressively larger share of current assets. The Chore Committee followed in 1979, pushing borrowers toward the second method and reducing dependence on cash credit by requiring a portion to be taken as a working capital demand loan.
Liberalisation and the Nayak Committee
The Nayak Committee reported in 1991 and simplified assessment for smaller units through the turnover method, under which working capital finance is computed as a percentage of projected annual turnover. This remains in use for small borrowers. Liberalisation itself changed the underlying problem: with volume and price no longer administered, projected sales became a genuine estimate rather than a licensed entitlement.
Banks get discretion
The Reserve Bank withdrew the mandatory maximum permissible bank finance formula in 1997, leaving banks free to set their own assessment methods. In practice most retained the Tandon framework because it worked, but the consequence for borrowers was significant: the numbers were no longer prescribed by regulation, so the borrower now had to argue their own case. The MSMED Act, 2006 later added statutory payment terms that constrain how far creditor days can be stretched in a projection.
Projections are verified before they are read
GST from July 2017 gave banks an independent monthly record of sales that can be checked against any projection, and account aggregator frameworks have made bank statement analysis instant. Credit teams now verify projected turnover against filed GSTR-1 and GSTR-3B before the file reaches a sanctioning authority. The practical effect is that optimistic sales projections are detected immediately, and the credibility cost of submitting them falls on every subsequent application.
Our Process
How Do We Prepare CMA Data?
Our preparation runs in eight steps and typically takes seven to fifteen working days, depending on how complete the underlying records are.
Document Collection and Verification
Analysis of the Actual Operating Cycle
Sales Projection Build
Cost Structure and Profitability Projection
Form II — Operating statement
Working Capital Gap and MPBF Computation
Form V — MPBF
Fund Flow and Ratio Analysis
Forms VI & VII
Internal Review Against the Lender Template
Submission Support and Query Response
The projections in CMA data should not be a standalone exercise. Where a client maintains a proper annual budget and rolling forecast or a driver-based financial model, the CMA figures are drawn from those rather than invented for the application, which makes them far easier to defend.
The four most common causes of CMA data rejection are projected turnover that cannot be reconciled to GST returns, a current ratio below 1.33 without explanation, undisclosed borrowings from other lenders, and holding period assumptions that contradict the audited accounts. All four are avoidable before submission.
By Sector
How Does Working Capital Assessment Differ by Sector?
The seven statements are the same for everyone. What differs is which line the credit team interrogates.
Manufacturing Units
Inventory dominates the assessment — raw material, work in progress and finished goods each carry their own holding period, and the norms differ sharply by industry. Consumption of power and fuel relative to production is checked as a plausibility test on the turnover projection. Creditor days cannot be extended freely, since Section 15 of the MSMED Act, 2006 requires payment to MSME suppliers within forty-five days and interest on delay is disallowed under the Income-tax Act.
Trading and Distribution Businesses
Assessment focuses on stock turnover and debtor quality, since these businesses hold little fixed asset security. Margins are thin, so a small error in the projected gross margin materially changes the profitability shown. Banks look closely at concentration — a distributor dependent on one principal or a handful of customers is assessed more conservatively regardless of the numbers.
Service Businesses and Contractors
With minimal inventory, the working capital gap is driven almost entirely by receivables and work in progress. For contractors, retention money and unbilled revenue are examined carefully because both are slow-realising and frequently overstated as current assets. Banks often apply the turnover method here rather than a full holding-period build.
Exporters and Import-Dependent Businesses
Export borrowers deal with packing credit, post-shipment finance and foreign currency limits, so the CMA data must separate the rupee and foreign currency components. Import-dependent units are assessed on letter of credit usage and the timing gap between import payment and domestic collection, which can stretch the operating cycle well beyond what the domestic sales figure suggests.
Why Us
Why Choose N D Savla & Associates for CMA Data?
These are the five reasons clients give for having us prepare the file.
We compute holding periods from the audited accounts rather than working backwards from the limit you want, which is why credit teams can verify the numbers instead of challenging them.
Every projected turnover figure is checked against what has already been filed, removing the most common cause of a returned file.
Bank templates vary in detail, and a file submitted in the wrong format is delayed before anyone reads the content.
If the computed permissible finance falls short of what you need, we say so before submission and discuss the alternatives rather than submitting a request that will be cut.
We answer credit team queries directly, which is where most working capital files lose weeks.
Where assessment norms, priority sector classification or facility structuring are in question, we work from the master directions and circulars published by the Reserve Bank of India at rbi.org.in, so the file reflects the current framework rather than dated practice.
Frequently Asked Questions
Frequently Asked Questions About CMA Data
What is CMA data and why do banks ask for it?
What documents are required to prepare CMA data?
How long does CMA data preparation take?
What is MPBF and how is it calculated?
Why do banks reject CMA data?
Talk to a CMA Data Consultant in Mumbai
Send us your last two audited balance sheets and your existing sanction letters. We will tell you what limit your operating cycle actually supports before you file anything.
Speak to N D Savla & Associates10:00 AM – 7:00 PM
