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Out of order
Accountancy
Can you please explain what does it mean? (a)
Answers (7)
Sanction limit - The bank after considering your credit profile and other factors will sanction you a certain amount of credit called sanction limit. Outstanding balance - The amount of credit you used and the amount payable to the bank. For example if you are sanctioned a limit of Rs 1,00,000 and you have used a credit amount of Rs 95,000 and this Rs 95,000 is the Outstanding Balance you are liable to bank. Upto here , Sanction limit > Outstanding Balance So , no problem . After that if you have not paid the outstanding balance , the bank may charge some Overdraft late fees of suppose Rs 10,000 . So now your outstanding balance is Rs 1,05,000 . Now , Sanction limit < Outstanding Balance Let's suppose your outstanding balance exceeded the sanction limit of Rupees one lakhs on 01/01/2022 and you haven't paid a single rupee upto the balance sheet date i.e , 31/03/2022 , then your account is called as "Out of order" This is summary with example of point (a)
CA Suraj Lakhotia Admin
Say credit limit is 100000 Outstanding is 120000
Sir, Is the limit of 90 days , prior to balance sheet date or they meant for continuous 90 days Sanction limit < Outstanding Balance ( irrespective of the balance sheet date ) ?
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