CMA Data for a Bank Loan: The Format, Forms I to VI, MPBF and What the Lender Checks

Ask a bank for a cash credit limit and, sooner or later, the branch asks for "CMA data". It is a set of financial statements laid out the bank's way: your past results, an estimate for this year and a projection for the next, rearranged so a credit officer can see how much money your business ties up in stock and debtors, how much your suppliers and your own funds carry, and how big a gap is left for the bank. This guide explains what each part of that format is for, how the limit is worked out from it, and the questions a lender's due diligence asks before trusting the numbers.

Written on 3 November 2026. The rules quoted are from the Reserve Bank of India's Directions for commercial banks as updated on 1 October 2026, and from ICAI's guidance for bank auditors. Every bank has its own template and its own loan policy, so use the form your bank gives you; this guide explains what sits behind it. It is general information, not advice on any loan.

What CMA data is, and why banks still ask for it

CMA stands for Credit Monitoring Arrangement, a name from the RBI's circulars of the late 1980s, when the RBI itself laid down how banks must size working capital. The method came from the Tandon Study Group: from 1975 the RBI had banks follow its Maximum Permissible Bank Finance (MPBF), under which a borrower funds part of its current assets from its own long-term money and the bank finances only what is left. In 1980, on the Chore Committee's advice, banks were made to fix separate limits for peak and non-peak needs.

That regime is gone. In April 1997 the RBI withdrew its prescription of MPBF and left each bank to decide, with its board's approval, how it assesses working capital. The RBI's own master circular for urban co-operative banks puts it plainly: the MPBF rule based on a minimum current ratio of 1.33 "has been withdrawn", and banks may use the turnover method, a cash budget, or keep MPBF "with necessary modifications". The same circular says the classification of current assets and current liabilities "ceases to be mandatory".

Yet the format survived, because it does a job no annual report does. It sorts every figure into the buckets a credit decision needs, and it puts history and projection side by side. Banks list it among the documents for any working capital loan; Canara Bank asks for "CMA data" from proprietors, firms and companies alike, and SBI's form for re-assessing limits above ₹5 crore asks for CMA data and a projected balance sheet. The Indian Institute of Banking & Finance still trains bankers to read "CMA Form No I to VI" in its 2026-27 credit management programme.

One rule shapes how the bank treats what you hand over. The RBI's Credit Risk Management Directions require a bank to make its own "independent and objective credit appraisal in all cases" and say it "must not depend" on appraisal reports prepared by outside consultants, especially the borrower's own (paragraph 7). Your CMA is the starting point. The banker rebuilds the analysis from it and tests it against your audited accounts.

The years a CMA covers

A CMA reads across columns of years. Punjab National Bank's MSME application, for example, asks for actual figures for the two previous years, an estimate for the current year and a projection for the next year for a working capital limit, and projections up to the last year of repayment for a term loan. Its checklist adds the last three years' balance sheets with income tax returns, audited where the limit is ₹25 lakh or more, and projected balance sheets for the next two years for working capital.

The format, form by form

The six forms build on one another. Sales and costs in the operating statement drive the stock and debtors in the balance sheet; the current items feed the comparative statement; the comparative statement feeds the limit; and the fund flow statement shows whether the plan hangs together. Line items differ a little between banks, but the structure below is the one bankers are taught.

Form I: existing and proposed limits

A table of every facility from every lender: cash credit, packing credit, bills, term loans, letters of credit and guarantees. For each it shows the limit now, how much is used, the limit asked for, the purpose, the security offered and the margin. Fund-based and non-fund-based limits are totalled separately. A banker reads this first, because the total exposure across the banking system decides which RBI rules apply (the ₹5 crore, ₹10 crore and ₹150 crore thresholds below).

Form II: operating statement

The point of this layout is the cost build-up. Raw materials consumed, cost of production and cost of sales are the denominators for the holding periods in Form IV, so a wrong split here distorts the limit later.

Form III: analysis of balance sheet

Regrouping, not copying, is the work here. Under Schedule III to the Companies Act, current maturities of long-term borrowings sit inside "short-term borrowings" (ICAI's Guidance Note on Division I, paragraph 8.3.1.11). In the CMA they must be pulled out of the bank's working capital borrowings and shown as instalments due within a year; otherwise the business appears to use more working capital credit than it does.

Form IV: current assets and current liabilities, with holding levels

This form restates each current item as a period of the flow it belongs to, usually in months. That turns a balance sheet into an operating picture: how long raw material waits, how long customers take to pay, how long suppliers wait for you.

The RBI no longer sets norms for these levels; its circular left each bank to decide what "reasonable" holdings are for an industry. Banks compare your levels with your own past and with peers, which is why IIBF's course pairs CMA reading with "Comparison of Holding Periods/Levels".

Form V: computation of MPBF

The old rules exempted export activity from the second method, so check how your bank's template treats export receivables in the 25% base.

Form VI: fund flow statement

It splits the change in the balance sheet into long-term sources (profit, depreciation, fresh capital, new term loans, sale of fixed assets) and long-term uses (capital spending, loan repayments, investments in group concerns, dividends), then shows how the remaining surplus or deficit is met in the short term. The banker is looking for one pattern above all: short-term borrowing, or money stretched from suppliers, paying for fixed assets or for investments in other companies. That is diversion, and it is what turns a working capital limit into a stuck loan.

Most banks add a ratio sheet as well: current ratio, total outside liabilities to tangible net worth, interest cover and, for term loans, the debt service coverage ratio. The benchmarks are each bank's own; IIBF's syllabus calls them "Benchmark Ratios as per Bank's loan policy", and no RBI rule fixes them.

Three ways the limit is worked out

Canara Bank, for one, lists all of these, plus a "net owned funds" system, and picks "depending on the type of activity". Your bank's loan policy decides which applies, so ask before the CMA is drawn up: the projections a turnover assessment needs are lighter than a full MPBF set.

A worked example

Take a components manufacturer asking for a cash credit limit. Its projection for next year: sales of ₹48 crore, all domestic and on credit; raw materials consumed and purchased of ₹30 crore; cost of production ₹40 crore; cost of sales ₹42 crore. Its projected year-end position (₹ crore):

The turnover method is out: 20% of ₹48 crore is ₹9.6 crore, beyond the ₹5 crore band, so the bank uses MPBF.

Under method II the bank would fund ₹8.5 crore and expect the owners to bring in another ₹0.8 crore of long-term money, by fresh capital, retained profit or a term loan, so that they carry a quarter of the current assets. Had the business been a small enterprise asking for less than ₹5 crore, say with projected sales of ₹15 crore, the turnover method would put the need at ₹3.75 crore, the owners' share at ₹0.75 crore and the bank's finance at ₹3 crore.

The limit is not what you can draw

Once sanctioned, drawings are capped by the drawing power, worked out each month from the stock and debtors statement. ICAI's Guidance Note on Audit of Banks explains the mechanics: the margin is applied to stock net of what is still owed to suppliers, because unpaid stock cannot be financed twice (the RBI's directive of 28 April 1993), and to receivables the sanction treats as eligible, less bills already discounted. Say the sanction sets a 25% margin on stock and 40% on receivables up to 90 days old, and a month-end statement shows the projected figures, with ₹1 crore of receivables older than 90 days:

With a sanctioned limit of ₹8.5 crore, the business can draw only ₹7.95 crore that month. The margins and the age cut-off here are illustrations; yours are in your sanction letter. ICAI's study material for bank auditors says an account must stay within both the drawing power and the sanctioned limit at all times.

RBI rules that apply once the limit is running

The asset classification rules quoted are from the 2025 Directions in force today. The RBI has issued their replacement, the Asset Classification, Provisioning and Income Recognition Directions, 2026, which take effect on 1 April 2027.

How a due diligence reviewer reads a CMA

Whether it is the bank's credit team, a stock auditor or an investor's diligence, the questions are the same, and most of them can be asked of the CMA before anyone visits the factory.

1. Do the actual columns match the signed accounts? Every actual year in Forms II and III should tie, after regrouping, to the audited statements and the income tax return, and sales to the GST returns. Banks' checklists ask for both. Auditors are told to compare the stock statement for the month the accounts close with the audited figures, and to find out why they differ.
2. Is the growth earned or assumed? Compare projected sales with the trend of the actual years and with the order book. In one case decided by ICAI's Disciplinary Committee, a firm with audited sales of ₹91.02 lakh had projected sales of ₹200 lakh for the next year certified; the bank relied on them and reported losses.
3. Are the holding levels the business's own? A jump in projected stock or debtor months raises the gap, and with it the limit. Ask why it will happen, and whether the past years show the same.
4. Does Form IV agree with the stock statements? The current assets in the CMA and those in the monthly statements behind the drawing power should tell one story. ICAI's 2026 guidance for bank auditors names "Financial Statement and Stock Statement Manipulations for enhanced loan eligibility" as a fraud risk, and notes that the spreadsheet in which banks enter CMA data has weak controls.
5. Is unpaid stock being financed twice? Creditors for goods, stock bought under letters of credit and buyer's credit all have to come off the stock figure before the margin.
6. Are the receivables real and current? Look for receivables from group concerns, old balances carried forward and customers who also appear as suppliers. Each sanction defines which receivables count.
7. Is short-term money funding long-term uses? Form VI shows it: a long-term deficit met by bank borrowing or by stretching creditors, often alongside investments in or advances to related companies.
8. Who stands behind the projections? A projection is the management's. A chartered accountant who examines it follows SAE 3400 on prospective financial information and must not let a name be used in a way that suggests the forecast's accuracy is vouched for, which is misconduct under clause (3) of Part I of the Second Schedule to the Chartered Accountants Act. In the ICAI case above, the member was removed from the register for three months and fined ₹20,000.

Mistakes that send a CMA back

• Copying the balance sheet line for line. Term loan instalments left inside short-term borrowings, unsecured loans from promoters shown as current, or advances to group companies counted as current assets all change the gap.
• Projections that do not connect. Sales rise 40% but debtors, stock and creditors stay where they were, or profit rises without the cost lines moving.
• A limit asked for before it is worked out. The bank's own computation will differ, and a CMA built backwards from a number is easy to spot.
• Ignoring the owners' share. Under method II a shortfall in net working capital means the promoters must bring in money; a CMA that does not show where it comes from will not be accepted as it is.
• Wrong period. A CMA for a renewal needs the current year's estimate built on actuals to date, not last year's projection rolled forward.

Documents to have ready

• Audited financial statements for the last two or three years, with the tax audit report and income tax returns; provisional figures for the current year to date.
• GST returns and a turnover statement for the current year.
• Month-wise sales, production, stock (raw materials, stock in process, finished goods), debtors and creditors for the past year, which PNB's form asks for above ₹25 lakh.
• Ageing of debtors and creditors, and the list of group concerns and dealings with them.
• Details of every existing limit (Form I), with sanction letters, and the latest stock statement.
• Projected profit and loss and balance sheets with the assumptions behind them: capacity, prices, credit periods, capital spending and how it is funded.
• KYC of the business and its promoters, and the LEI where exposure is ₹5 crore or more.

Frequently Asked Questions

Is CMA data required by RBI rules? Not as a form. The RBI withdrew its working capital method in 1997, and today each bank asks for CMA data under its own board-approved loan policy. What the RBI does require is an independent appraisal by the bank, drawing power from current stock statements, and timely review of limits.

For what loan amount does a bank ask for CMA data? It depends on the bank and the product. PNB's MSME form asks for past figures and projections for working capital limits and for detailed month-wise data above ₹25 lakh; SBI asks for CMA data when it re-assesses limits above ₹5 crore. Ask your branch for its template.

How many years should a CMA show? Usually two or three audited years, an estimate for the current year and a projection for the next year. For a term loan, the projection runs until the loan is repaid.

What is the difference between the turnover method and MPBF? The turnover method sizes the limit from projected sales alone: for micro and small enterprises with limits up to ₹5 crore, the bank finances at least 20% of projected turnover, with the borrower bringing 5%. MPBF works from the projected balance sheet, deducting what suppliers fund and what the owners must fund from current assets.

Why can I draw less than my sanctioned limit? Because drawings are limited to the drawing power: your current stock and eligible receivables, less what you owe suppliers for the stock, less the bank's margin. If stock or debtors fall, so does what you can draw.

What happens if I submit stock statements late? A drawing power based on a statement older than three months makes the outstanding irregular. A late statement alone does not make the account an NPA, but an account that stays out of order for 90 days, or a limit not renewed within 180 days of its due date, does.

Can a chartered accountant certify my projections? A CA can prepare them, or examine them under SAE 3400, which means testing the management's assumptions rather than repeating them. A CA cannot vouch that a forecast will come true, and ICAI has disciplined a member who certified projected sales without checking them.