CMA Data1

The full form of CMA data is credit monitoring arrangement data. As per RBI guidelines, credit monitoring arrangement data is required for project loans, term loans and working capital limits.

You have to provide the CMA Data Bank every year to renew the existing bank loan. CMA data is a systematic analysis of working capital management. The purpose of CMA data is to ensure the use of funds effectively.

CMA data are prepared according to the occupation and their business nature and size. Similarly, CMA data is prepared according to facilities borrowed from the bank.

Preparing CMA data does not just mean filling data in RBI format. An in-depth knowledge of finance is required to prepare a credit monitoring arrangement.

The following statements are included in this report to help the banker understand the financial health of the company.

1. Description of bank facilities – Details about current and proposed bank facilities. Will show both fund-based and non-fund based limits.

2. Profit and Loss Statement – The profit and loss statement of the last 2 years are included to know the past performance of the company. Projected profit and loss statement of the next 10 years is present to know the future performance. The earning cycle is also shown for the show’s capability to pay expenses.

3. Balance Sheet – A study of the balance sheet is present to know the financial situation.  The last 2 years’ balance sheet is included in the CMA report. In the report, the balance sheet for the next 10 years is present in a comparative way.

4. Cash flow statement – Cash flow statement is also included in CMA data to understand the flow of bank and cash funds. Whether the company is using its funds properly, this can be identifying from the cash flow statement.

5. Working capital – Current assets and current liabilities are differential working capital. The working capital report helps to know the short-term solvency of the company. If the company has enough money to pay its current liabilities, then it can be assumed that the company will not misuse long term resources.

6. Ratio Analysis – Ratio analysis are present in the CMA data report. Ratio analysis allows banks to understand the company’s position more clearly within minutes.

7. MPBF – Maximum permissible bank finance (MPBF) obtain as per RBI’s formulas. Banks are not able to provide loans for working capital more than MPBF. This calculation shows the borrower’s maximum ability to borrow money.

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Information and documents required to prepare CMA data report: –

1. Financial Statements for the last 2 years

2. Provisional Financials for the current year

 3. Latest sanction letter (in case of renewal)

4. Term loan repayment schedule, if any

5. Details of proposed enhancements (if any) with terms and conditions

5. CMA data report previously received from CA

Why does the bank need CMA data?

You are aware that banks are required to follow RBI instructions to run finance business. RBI suggests that CMA data see for lending. Almost all banks require CMA data. Even for small loans ranging from five lakh to 10 lakh, banks ask to submit CMA report. By performing CMA data analysis, banks can easily understand the flow of borrowers and the feasibility of projects.

Are CMA data reports helpful in getting loans quickly?

The correct ratio and proper presentation of the use of funds are show through CMA data reports. By presenting your financial information appropriately, the chances of getting a loan early is increase. Banks also agree to give loans at low interest rates due to proper presentations.

CMA Data Preparation

Normally your CA prepares CMA data. He takes a lot of time to prepare CMA data and charges high for the same. Despite this, the banks are not satisfied with the CMA prepared by your CA. The more difficulties you face, the bank raises many questions involving CMA.

Do you feel the need for an expert who can produce a well-detailed and valid CMA data? Help you avoid a long list of questions from the bank. Based on the estimates given in the CMA data, the bank decides on the need for limits for the next year as well.

Through our portal, you can troubleshoot these problems as well as get the right and low cost solutions.

CMA Data : –

CMA data required by the bank. We will provide CA certified data to you without any extra charge we prepare the following CMA data reports.

I Form (Details of existing / proposed limits)

II Form (Operating Statement)

III Form (Balance Sheet Analysis)

IV Form (Comparative Statement of Current Assets and Liabilities)

V Form (Calculation of MPBF)

VI Form (Fund Flow Statement)

Cash flow statement

Financial and valuation parameters (separate ratio analysis report with calculations)

DSCR (consolidated and standalone)

Company profile including answers to all possible queries of the bank

In conclusion, banks rely on this report. The CMAs carefully evaluate the data to determine creditworthiness.

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What is Credit Monitoring Arrangement (CMA) data?

Credit Monitoring Arrangement Data, or CMA Data, is a financial report used by lending institutions to monitor and analyse a company’s financial situation prior to granting credit. It also helps represent the company’s past and current performances in economic terms. The Reserve Bank of India has ordered that all banks produce CMAs for lending to big borrowers under current guidelines. For project loans, term loans, and working capital limits, CMA data is required. One has to provide the credit monitoring arrangement data every year to renew the bank’s loans. A properly designed CMA report might improve your chances of getting a bank loan.

Banks have been allowed to sanction loan offers (for big borrowers) under the Credit Monitoring Arrangement (CMA) after a rigorous study of historical performance. There is another requirement for the Banks. They must submit major credit proposals for post-sanction examination to the Reserve Bank of India. Working capital limitations of Rupees 500 lakhs (5 crores) and a term loan of above 200 lakhs are included in these suggestions (2 crores).

What does a Credit Monitoring Arrangement (CMA) report mean?

The CMA report, also known as the Credit Monitoring Arrangement report, depicts a company’s predicted and historical financial performance. A well prepared Credit Monitoring Arrangement report can enhance and increase your chance of obtaining a bank loan. It is compiled with all the required financial ratios and metrics to help Financial Analysts and Bankers ascertain a business’s financial health.

What is essential in Credit Monitoring Arrangement (CMA) data for the bank loan?

If we require funds to start a new project, we should describe that related information in our project report. CMA data is mostly used for ratio analysis. We have to give realistic figures before our investors/bankers by using ratio analysis by presenting figures in a comparative format. The following is the most commonly used ratio when preparing CMA data:
• Gross Profit Ratio (%)
• Operating Cost Ratio (%)
• Operating Profit Ratio (%)
• Net Profit Ratio (%)
• Interest Coverage Ratio (Times)
• Debt-Service Coverage Ratio
• Debt-Equity Ratio
• Total Indebtedness Ratio
• Debt Assets Ratio
• Fixed Assets Coverage Ratio
• Inventory Turnover Ratio
• Debtors Turnover Ratio (Days)
• Creditors Turnover Ratio (Days)
• Capital Turnover Ratio
• Total Assets Turnover Ratio
• Return on Capital Employed Ratio (%)

Note: Bankers typically compare the above-mentioned ratios to established benchmark ratios that are already accessible. If percentages are not within the acceptable limit, it may lead to the rejection of your loan application. As a result, we must be cautious when categorising our financial statistics in the Profit/Loss Account and Balance Sheet. The wrong classification of a current asset as a long-term investment impacts our current ratio.

What are the documents required to prepare Credit Monitoring Arrangement data (CMA)?

The following documents will be required to prepare Credit Monitoring Arrangement data:
1. Filed Income Tax Returns of the owners.
2. Auditable Financial Statements of previous two years.
3. Provisional Financial statement for the current year in preparing CMA Data.
4. Notes on assumptions used by us while preparing Projected Financial statements and term and conditions repayments.
5. Cost sheet of Direct and Indirect expenses.

What are the critical points to be kept in mind while preparing Credit Monitoring Arrangement (CMA) data?

The Reserve Bank of India has mandated that all banks and organisations file CMA Data Reports before granting further loans for company development or increasing credit limits. The CMA report structure is typically set, and it includes financial comparisons, performance analyses, and information of credit usage sequences over the previous two years. In CMA Report Preparation:
a) All assumptions and estimates used in CMA preparation should be mentioned separately.
b) Future projections should be realistic and not merely arithmetic multiples of current performance.
c) Fluctuations in performance should be strongly justifiable
d) Annexed and linked to CMA Data should include all fixed assets, depreciation, and loan payback schedules.
e) Past performance and actual numbers should be exactly as per Audited Financials
f) The company should be able to justify the implementation and numbers projected
g) In case of multiple businesses activity or locations, a detailed annexure should be attached showing the breakup of how the projected numbers are arrived at
h) CMA Data should represent a viable business performance – over-borrowing is unfavourable and cannot be justified through financial ratios.
i) It’s worth noting that, despite the fact that CMA Data is a thorough examination of a company’s profit and loss account and balance sheet, loan eligibility is determined using only a few ratios and indications.
j) The key to successful CMA Data preparation is to demonstrate a strong financial prognosis while also communicating that funds are required for expansion. As a result, a perfect balance must be reached and described using CMA Data: the firm must be healthy enough to repay the loan but not so healthy that it cannot develop without it.

What is included in Credit Monitoring Arrangement (CMA) data?

The financial health of your organisation is represented by CMA statistics. This information is used by banks and other lending organisations to assess your company’s eligibility for the cash sought. Every time you wish to renew or expand your existing loans, you’ll need the CMA data. The following statements are covered by the CMA report:

I. The CMA report covers the company’s current borrowed and proposed future financial funds, and any new business must provide the offered or the prospective data. An operating statement or the Profit and Loss statement represents the company’s performance.

II. For any business nature and loan, one is required to provide the five statements, two past statements and three future statements. There can be some changes as per the loan or business nature. All types of profit and loss should reflect in it. The balance sheet predicts the company’s financial situation.

III. Details about current assets, fixed assets, current and long-term liabilities are presented in this statement. Past year balance sheets details are required to show in the CMA report. It is also supposed to reflect the future balance sheet data to establish a clear picture of your future business plan and deliver the details about current assets, fixed assets, current and long-term liabilities in this statement. It contains details about Profit and Loss Account, Cash Flow Statement, Ratio Analysis, Balance Sheet, Fund Flow Statement, Analysis of Maximum Permissible Bank Finance. The balance sheet maintain the financial position of the firm.

IV. The CMA report describes various comparative statements of current assets and liabilities of the working capital. An operational capital report provides a comparative analysis of current assets and liabilities.

V. Calculation of maximum permissible bank finance. CMA includes the working capital calculation of the maximum capacity of the borrower to borrow the money from the bank. It is a significant statement.

VI. This statement shows the analysis of fund flow statements for current and proposed years. It shows the fund utilisation of the borrower concerning the projected balance sheets, MPBF and sources of funds. The information is essential because it highlights the utilisation of funds. Ensure the bank that you are using the fund for the purpose you have borrowed. The fund flow statement indicates how the company’s money is spent.

VII. Analysis of Ratio: This is also one of the long and vital CMA data statements that provide the critical ratio for the Financial Analysts and use of bankers. Banks use ratio analysis to better understand the organisation. The current ratio, MPBF, Net worth ratio, quick ratios, turnover ratios, debt-equity ratios, and DSCR are some examples of ratios.

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