What CMA data actually is
When a bank asks for “CMA data,” it is not asking for your balance sheet again. It is asking you to restate your financials in its analytical format — one that separates current assets from long-term assets, strips bank borrowings out of current liabilities, and projects all of it forward — so the credit team can compute a defensible lending limit and monitor performance against it afterwards.
The arrangement dates to the Reserve Bank’s credit-monitoring framework and the Tandon and Chore Committee recommendations on working capital lending. Individual banks have modernised the presentation, but the underlying structure and the arithmetic have stayed broadly consistent, which is why the same CMA can be adapted across lenders.
The standard CMA format, form by form
Most bank templates run to six or seven statements. The labels vary slightly between lenders; the substance does not:
| Form | What it contains | What the bank reads from it |
|---|---|---|
| I — Existing & proposed limits | Present credit facilities, outstanding balances, security, and the limit now applied for | Your current exposure and what is being asked for |
| II — Operating statement | Sales, cost of sales, expenses and profit — past actuals, current-year estimate, projections | Whether the business is growing and profitable |
| III — Analysis of balance sheet | Liabilities and assets reclassified into current and non-current | Net worth, leverage and asset quality |
| IV — Current assets & liabilities | Inventory, receivables, creditors and other current items in detail, with holding periods | Whether your working-capital cycle is realistic |
| V — Computation of MPBF | The working-capital gap and the permissible bank finance derived from it | The limit itself — this is the arithmetic that matters |
| VI — Fund flow statement | Sources and uses of funds across the projection period | Whether the funding plan is internally consistent |
| VII — Ratio analysis | Current ratio, TOL/TNW, turnover and coverage ratios (sometimes folded into Form VI) | The pass/fail screens applied to the file |
For a walkthrough of what goes in each form on a worked set of numbers, see CMA data format: the seven statements, filled in. A blank working structure covering all seven forms, both MPBF methods, the ratio screens and a pre-submission consistency checklist is available as a downloadable CMA data format template at the end of that article.
The single most common reason a CMA is sent back is not a wrong ratio — it is inconsistency. Form II’s sales figure must reconcile with the receivables in Form IV, with the fund flow in Form VI, and with the GST and income-tax turnover you have already declared. A CMA that contradicts your own filings is worse than no CMA.
How the limit is computed: MPBF, with a worked example
Maximum Permissible Bank Finance (MPBF) is the ceiling the bank’s own method allows. The widely used approach (the Tandon Committee’s second method) works in three steps: find the working-capital gap, require the borrower to fund a quarter of current assets from their own resources, and lend the remainder.
Take a trading business projecting ₹3 crore of sales:
| Item | Amount |
|---|---|
| Inventory | ₹45,00,000 |
| Receivables | ₹50,00,000 |
| Other current assets | ₹5,00,000 |
| Total current assets (CA) | ₹1,00,00,000 |
| Less: creditors and other current liabilities | ₹25,00,000 |
| Working-capital gap (WCG) | ₹75,00,000 |
| Less: borrower’s margin — 25% of current assets | ₹25,00,000 |
| MPBF — indicative limit | ₹50,00,000 |
Note what falls out of this. With a ₹50 lakh limit drawn, current liabilities become ₹75 lakh (₹25 lakh creditors plus ₹50 lakh bank) against ₹1 crore of current assets — a current ratio of exactly 1.33:1. The benchmark bankers quote is not arbitrary; it is the arithmetic consequence of the method. If your projected current ratio comes out below 1.33, you are implicitly asking for more than the formula permits, and the file will be questioned.
Two practical consequences. First, the limit is driven by your current assets, not your turnover — a business with fast collections and lean stock justifies a smaller limit on the same sales. Second, stretching inventory and receivable holding periods to inflate the gap is the most transparent thing you can do in a CMA; credit teams compare holding periods against your own history and the sector.
The ratios banks reject on
Thresholds vary by bank, sector, scheme and the strength of the rest of the file — treat these as the commonly applied screens rather than fixed rules:
| Ratio | What it measures | Commonly looked for |
|---|---|---|
| Current ratio | Current assets ÷ current liabilities | Around 1.33:1 for working-capital limits |
| TOL/TNW | Total outside liabilities ÷ tangible net worth — overall leverage | Generally up to about 3:1 |
| DSCR | Cash available to service debt ÷ interest and principal due | Average comfortably above 1.5 for term loans |
| Interest coverage | Operating profit ÷ interest cost | Typically 2:1 or better |
| Debt–equity | Term debt ÷ owner’s funds, for project finance | Commonly 2:1, sometimes 3:1 for MSME schemes |
Drawing power sits alongside these. Even with a ₹50 lakh limit sanctioned, what you can actually draw each month is recomputed from your stock and receivables statement after applying the bank’s margins — so a sanctioned limit and an available balance are not the same thing.
Weak ratios are frequently fixable before submission — by clearing related-party balances, correcting the classification of items between current and non-current, or timing a capital infusion. Caught after the banker raises them, the same issues cost weeks.
CMA data vs project report vs DPR
These three are routinely confused, and asking for the wrong one wastes a cycle with the bank:
| Answers | Used for | |
|---|---|---|
| CMA data | How much working capital does this business need? | New and renewal cash credit / overdraft limits |
| Project report | Is this specific investment viable and can it repay the loan? | Term loans — machinery, premises, expansion |
| DPR | Everything a project report covers, plus technical feasibility, market study and risk analysis | Large projects, subsidy and government-scheme applications |
A business buying machinery and renewing its CC limit will need a project report and CMA data together — the term loan is assessed on viability, the working-capital limit on the current-asset cycle. If you are not sure which one your bank has asked for, this guide works it out from the requirement letter.
What’s covered
- CMA data for new and renewal OD/CC (working capital) limits — past financials, current-year estimates and two to five years of projections in the standard bank format, with assumptions documented and defensible.
- Project reports for term loans — machinery, commercial property, business expansion — including cost of project, means of finance, repayment schedule and viability ratios.
- MSME and government-scheme documentation (Udyam-linked loans, Mudra and similar), where the paperwork is simpler but the formats are strict.
- Provisional and projected financial statements, net-worth certificates, and turnover certificates that banks and contract tenders routinely demand.
- Banker queries: when the credit team comes back with questions, the responses and reworked sheets are handled — not left to you.
Who uses this
Contractors needing working-capital limits against running bills, traders renewing CC limits, small manufacturers buying machinery, and businesses formalising for their first significant bank facility. Where the accounts themselves need building first, that is handled as part of accounting and bookkeeping; where the bank also wants audited figures, see audit and assurance.
Documents needed, and timeline
- Last 2–3 years’ financials (audited/provisional) or ITRs.
- The bank’s requirement letter or sanction/renewal checklist.
- Latest GST returns and a stock/receivables statement (for working-capital limits).
- For a term loan: quotations/cost of the machinery or project and the proposed means of finance.
- A short note on the business, the limit sought and its purpose.
With those in hand, a CMA is typically ready in 3–5 working days, and faster where a renewal date is pressing. A realistic assessment of what the numbers support comes first — before the documentation is built, because there is no value in preparing a case for a limit the ratios will not carry.