There are several types of bank accounts that banks provides to there different customers to serve there needs. But majority of the customers are not aware which is why most of the people have either savings accounts or current accounts only. OCC A/C and OD A/C are two special accounts that allow business owners have the facility of credit without having to formally apply for a loan. There are many similarities in these two types of account though there are also some differences.
Open cash credit (OCC) Account is a kind of bank account which basically serves to small & medium enterprises (SME). An OCC A/c holder can have cash credit facility against his stocks & receivables. Different banks and financial institutions have different criterion to assess the limit of an OCC A/c. In a majority of cases, the OCC limit is calculated depending upon turnover of the SME.
OD in banking typically stands for overdraft or overdrawn, it is simply a current account with the facility of overdraft that current account holders running a small business are entitled to in any bank. With this facility, the account holder can issue a Cheque up to the limit prescribed by bank even if he does not have money in his account and he is charged interest only on the overdrawn amount on which applicable interest rates are levied. For Example, If u have balance in your bank account is Rs 500,000 and bank give you permission of OD. Then if you issue cheque of Rs 800,000 then your cheque will not going to bounce because bank permits you OD. Its like sort term loan from bank where you have to pay interest on the overdrawn amount.
Difference Between OCC A/C And OD A/C
- OCC stands for Open cash credit whereas OD stands for Overdraft
- An OCC Account holder can have cash credit facility against his stocks and receivables whereas an OD A/c holder can withdraw up to the limit prescribed by bank even if he does not have money in his account.
- In OCC account, you can get cash credit facility only against your current assets whereas in OD A/c you can get OD facility against your deposits and assets.
Similarities Between OCC A/C And OD A/C
- Both serves to Small & Medium enterprises
- Both are kind of short term loans from bank
- The purpose of both the accounts is to meet the shortfall in working capital of the SME