What Is CMA Data and Why Do Indian Banks Ask for It Before Sanctioning Working Capital?

CMA data — Credit Monitoring Arrangement data — is a standardised set of seven financial statements an Indian borrower submits when applying for working capital or term credit. It covers past audited results, projections, current assets and liabilities, the MPBF computation, fund flow and ratios. Banks use it to size the limit and test whether the projections hold.

Key facts

• Seven statements, one running order. Existing and proposed limits; operating statement; analysis of balance sheet; comparative statement of current assets and current liabilities; calculation of MPBF; fund flow statement; ratio analysis. Sheet 4 feeds sheet 5, and sheet 5 sets the limit.
• No regulator publishes a CMA template. RBI prescribes neither a format nor a filename. The seven-statement layout is an industry convention descended from the Tandon Working Group's information system, not a mandated return — a reviewer should confirm no lender-specific circular applies.
• The ratio norm CMA was built around is formally gone. RBI records that "the earlier prescription regarding Maximum Permissible Bank Finance (MPBF), based on a minimum current ratio of 1.33:1, recommended by Tandon Working Group has been withdrawn" (RBI, Master Circular — Management of Advances (UCBs), RBI/2023-24/51, 25 July 2023, para 3.1.2). Most lenders kept it anyway, in their own board-approved policy.
• Stale numbers have a hard regulatory consequence. Stock statements used to fix drawing power "should not be older than three months", and drawings on a DP computed from older statements are "deemed as irregular" — 90 continuous days of that makes the account an NPA (RBI, Master Circular on IRAC Norms, RBI/2023-24/06, para 4.2.4).
• YuSight reads the source documents at 95.2% extraction accuracy, validated against a manual benchmark — so the analyst spends the hour on whether the holding periods are credible, not on rekeying them.

What does CMA stand for, and where did it come from?

CMA is Credit Monitoring Arrangement. The name is a historical accident that confuses almost everyone who meets it for the first time.

The arrangement was a supervisory reporting regime: banks reported large advances to RBI, and borrowers fed banks a standard set of financial statements so those reports could be built. The supervisory reporting has long since changed shape. The borrower-side statement pack survived, kept its old name, and is now simply what a credit department asks for when it needs a borrower's financials in a form it can assess.

So the term describes a reporting arrangement, but in 2026 practice it means one thing: a workbook of seven financial statements the borrower's chartered accountant prepares and submits with the loan application.

Two clarifications worth making early, because both come up in every first-year credit conversation:

• CMA data is not audited. Statements 1 to 3 restate audited history. Statements 4 to 7 are, in the projected columns, the borrower's forecast. Nobody has attested them.
• CMA data is not a CAM. CMA is the borrower's submission. The Credit Appraisal Memorandum is what the lender writes after testing it. CMA is input; the CAM is the decision.

What are the seven statements in CMA data?

A well-prepared pack has all seven on separate sheets with the same column headers and the same units. A badly prepared one has statements 1, 5 and 7 typed in independently of the rest — which is exactly the failure mode described further down.

The mechanics of building each sheet, with the formulas and the cross-sheet tie-out checks, are covered separately in CMA data format in Excel.

Why do banks ask for CMA data at all?

Four reasons, in the order a credit committee cares about them.

1. It sizes the limit. A cash credit limit is not a percentage of turnover picked from a table. Above the small-ticket thresholds it comes out of a working capital gap computation, and that computation needs current assets and current liabilities broken into classes with holding periods attached. Statement 4 is the only place that data exists in usable form.

2. It makes the projection falsifiable. A borrower asking for a ₹10 crore limit has to state, on paper, the sales, the inventory days and the receivable days that justify it. Twelve months later the analyst can compare. A renewal note that puts last year's projection next to last year's actual is doing more real credit work than most rating models.

3. It standardises across a messy document set. Indian MSME files arrive as scanned audited financials, a Tally export, GST returns, an ITR-6 acknowledgement and a stock statement, often across two or three related entities. CMA forces one classification onto all of it.

4. It supports monitoring after sanction. The current ratio and TOL/TNW in statement 7 become the covenants. The holding periods in statement 4 become the yardstick against which each month's stock statement is judged.

Is CMA data mandatory for every loan?

No — and getting this wrong wastes a lot of borrower and analyst time.

There is no RBI instruction that says "submit CMA data". What exists is a threshold structure for how working capital is assessed, and CMA is simply the format that the more detailed assessment methods need.

Under the turnover method the working capital requirement "is to be assessed at 25% of the projected turnover to be shared between the borrower and the bank, viz. borrower contributing 5% of the turnover as Net Working Capital (NWC) and bank providing finance at a minimum of 20%", applicable up to ₹1 crore generally and ₹5 crore for micro and small enterprises (RBI, Master Circular — Management of Advances (UCBs), RBI/2023-24/51, paras 2.1–2.3). This Master Circular is addressed to urban co-operative banks; commercial banks apply materially the same method under their own loan policies, and a reviewer should confirm the specific lender's threshold.

For the smallest exposures the contrast is sharper still. The Common Loan Application Form used for MSME loans up to ₹1 crore asks for "actual performance for two previous years, estimates for current year and projections for next year" on net sales, net profit and capital — about eight lines, not seven statements (Indian Bank, Common Loan Application Form for MSME Loans up to ₹1 crore).

At ₹150 crore and above, the RBI Guidelines on Loan System for Delivery of Bank Credit require that "the outstanding 'loan component' (Working Capital Loan) must be equal to at least 40 percent of the sanctioned fund based working capital limit", raised to 60 percent with effect from 1 July 2019 (RBI/2018-19/87, 5 December 2018). That split does not change how CMA is prepared, but it changes what the sanction letter says.

A CMA pack, worked line by line

Illustrative only. The borrower and every figure below are constructed to show the arithmetic. Margin percentages and ratio norms are lender-specific policy choices, not regulatory minimums.

Statement 2 — operating statement, and the first flag

Growth check, computed rather than eyeballed:

• FY2025 over FY2024: (44.90 − 38.60) ÷ 38.60 = 16.3%
• FY2026 over FY2025: (51.20 − 44.90) ÷ 44.90 = 14.0%
• FY2027 over FY2026: (64.00 − 51.20) ÷ 51.20 = 25.0%

The projection nearly doubles the trend growth rate. That is not a rejection, but it is a question with a name: what changed? New machine, new customer, new shift. If the answer is "we expect market conditions to improve", the projected column is decoration.

Statement 4 — projected current assets and current liabilities

Now re-derive the FY2026 actuals and compare, which is the check most analysts skip:

• Receivables FY2026: ₹8.10 cr ÷ ₹51.20 cr × 365 = 57.7 days actual against 61 days projected. Collections are projected to get worse while sales grow 25%. Ask why.
• Raw material FY2026: ₹4.60 cr ÷ ₹30.70 cr × 365 = 54.7 days actual against 52 days projected. Tighter buying, in a year of 25% volume growth. Optimistic.
• Creditors FY2026: ₹3.90 cr ÷ ₹32.10 cr × 365 = 44.4 days actual against 44 days projected. Consistent. Accept.

Two of the three holding periods move in the direction that inflates the limit. That is the normal shape of a CMA pack, and it is why statement 4 gets re-derived rather than read.

Statement 5 — MPBF, Method II

Working capital gap = TCA − OCL = 22.00 − 6.50 = ₹15.50 crore

• Minimum margin under Method II = 25% of TCA = 0.25 × 22.00 = ₹5.50 crore
• MPBF (a) = TCA − 25% of TCA − OCL = 22.00 − 5.50 − 6.50 = ₹10.00 crore
• MPBF (b) = working capital gap − projected NWC = 15.50 − 5.20 = ₹10.30 crore
• MPBF = lower of (a) and (b) = ₹10.00 crore

Resulting current ratio = 22.00 ÷ (6.50 + 10.00) = 22.00 ÷ 16.50 = 1.33 : 1

The borrower's own projected balance sheet carries bank borrowing of ₹10.30 crore, giving 22.00 ÷ (6.50 + 10.30) = 1.31 : 1. The ₹0.30 crore difference is the NWC shortfall: Method II demands NWC of ₹5.50 crore, the borrower projects ₹5.20 crore. The standard condition is promoter infusion of ₹0.30 crore as unsecured subordinated loan with a non-withdrawal undertaking.

Method I on the same numbers gives a materially higher answer, and the reason the two differ is worked through in MPBF calculation explained.

Statement 6 — fund flow, and the tie-out that catches fiction

Surplus available to fund current assets = 6.06 − 4.66 = ₹1.40 crore

Net working capital, FY2026 actual = ₹3.80 crore. Add the surplus: 3.80 + 1.40 = ₹5.20 crore projected NWC, which is exactly the NWC used in statement 5.

That equality is the test. If statement 6's long-term surplus does not reconcile to the movement in NWC between statement 3's two balance sheet columns, one of the sheets has been typed rather than computed. In a spreadsheet built by hand, this is the check that fails most often.

Statement 7 — ratios, with the adjustment that matters

• Current ratio = 22.00 ÷ 16.50 = 1.33 : 1
• Tangible net worth = capital 4.00 + reserves 9.40 − intangibles 0.40 = ₹13.00 crore
• Total outside liabilities = term loan 6.20 + cash credit 10.00 + OCL 6.50 + unsecured promoter loans 2.40 = ₹25.10 crore
• TOL/TNW = 25.10 ÷ 13.00 = 1.93
• Adjusted for ₹2.40 crore of promoter loans treated as quasi-equity: TOL 22.70 ÷ TNW 15.40 = 1.47

Report both. The unadjusted 1.93 is what the balance sheet says; the adjusted 1.47 is what the risk actually is, provided the subordination undertaking is on file and the auditor has not shown the loans as repayable on demand. Analysts who adjust without checking the undertaking are marking their own homework.

Drawing power, which is a different number again

Stock and book-debt statement as at 31 July 2026:

Sanctioned limit ₹10.00 crore. Drawing power ₹7.92 crore. The borrower may draw ₹7.92 crore. The CMA justified the limit; the monthly stock statement controls the draw.

What do banks actually reject or return CMA data for?

Rejection is rare. Returned for rework is routine, and the same handful of defects account for most of it.

1. Statement 5 does not tie to statement 4. The MPBF has been reverse-engineered from the limit the borrower wants, and the current assets were then written to fit. Recompute TCA − OCL and compare to the stated working capital gap; a mismatch takes ten seconds to find.
2. Bank borrowing sitting inside other current liabilities. OCL in statement 4 must exclude short-term bank borrowing, because that borrowing is the answer, not an input. Including it deflates the gap.
3. Holding periods that improve without a cause. Receivable days falling in a year of aggressive sales growth, with no change in customer mix or credit terms.
4. Statement 1 disagreeing with the bureau report. An existing facility with another lender omitted, or a term loan shown at sanctioned rather than outstanding value. This is the one that gets escalated rather than returned.
5. Non-current items inside TCA. Loans to group entities, security deposits with electricity boards, disputed tax refunds outstanding beyond a year, and investments in associates all get pulled out.
6. Export receivables counted twice. Debtors already financed under packing credit or bill discounting limits, then included again in the DP computation.
7. Inconsistent day-count. Statement 4 built on 365 days, statement 7's turnover ratios on 360 or on 12 months. Small on any one line, visible when the ratios are recomputed.
8. Units drifting between sheets. Lakhs on statements 2 and 3, crores on 4 and 5. Common in packs assembled from more than one template.
9. Stale supporting data. A stock statement older than three months invalidates the drawing power computed from it under RBI's IRAC norms, and the drawings become irregular (RBI/2023-24/06, para 4.2.4).
10. Provisional financials with no reconciliation to the audited version. When the audit lands with different numbers, the whole assessment is retrospectively wrong.

Who prepares CMA data, and what does the lender do with it?

The borrower's chartered accountant prepares it, almost always in Excel, almost always from the same template the firm has used for a decade. Fees are commercial and vary widely — no published benchmark exists.

The lender's side of the work is different in kind. The credit officer:

• reconciles statement 1 against the CIC report and the bank's own exposure records;
• re-derives statement 4's holding periods from the audited columns;
• recomputes statement 5 rather than accepting it;
• checks statement 6's surplus against the movement in NWC;
• recomputes statement 7's ratios from statement 3 rather than reading them off;
• and only then writes the assessment into the credit assessment memo.

Every one of those steps is arithmetic on numbers that arrived as a PDF or a locked spreadsheet. That is where the day goes.

CMA data versus the other things it gets confused with

Where the borrower universe sits

As at 27 August 2026 the Udyam portal showed 9,38,70,188 registrations across Udyam and the Udyam Assist Platform, of which 5,21,50,106 Udyam registrations were micro enterprises, 5,42,201 small and 41,831 medium (Ministry of MSME, Udyam Registration portal). The distribution explains the assessment thresholds: the overwhelming majority of registered enterprises will never need a seven-statement CMA pack, because their limits fall under the turnover method.

It is the small and medium tail — roughly 5.8 lakh enterprises — that generates most CMA submissions, and those are the files where a ₹0.30 crore NWC shortfall or a 3-day receivable overstatement changes the sanction.

Two threshold changes a reviewer should note, because both moved recently:

• MSE loans are collateral-free "up to ₹20 lakh", extendable to ₹25 lakh on track record (RBI, Master Direction — Lending to MSME Sector, RBI/FIDD/2017-2018/56, updated 9 February 2026). RBI's MSME FAQ dated 29 July 2025 still states ₹10 lakh; the Master Direction is the later document, but confirm which the lender's policy tracks.
• The composite loan limit for single-window working capital plus term loan is ₹1 crore, and credit decisions on MSE loans up to ₹25 lakh must be taken within 14 working days (same Master Direction).

Frequently asked questions

What is CMA data in banking?

It is a workbook of seven standardised financial statements a borrower submits with a working capital or term loan application. It covers past audited results, projections, a current assets and liabilities breakdown, the MPBF computation, fund flow and ratios.

Why do banks ask for CMA data?

Because a working capital limit above the turnover-method thresholds is derived from a working capital gap, and that gap needs current assets and liabilities broken into classes with holding periods attached. No other document the borrower files gives it in that form.

Is CMA data mandatory for every loan?

No. There is no RBI instruction requiring it, and for MSE working capital limits up to ₹5 crore the turnover method and a simplified application form are usually enough. It becomes standard above those thresholds, where the assessment method needs the detail.

What does CMA stand for?

Credit Monitoring Arrangement. The name comes from an older supervisory reporting regime; the statement pack outlived the arrangement and kept the label.

Is CMA data audited?

No. Statements 1 to 3 restate audited history, but the projected columns in statements 4 to 7 are the borrower's forecast with no attestation behind them. That is precisely why the analyst re-derives the holding periods.

How many years does CMA data cover?

Usually five columns — two audited years, one provisional or estimated current year, and two projected years. Some lenders ask for three projected years on term loan proposals.

What is the difference between CMA data and a project report?

CMA data sizes a working capital limit over a five-year window and is refreshed at every renewal. A project report is a one-time document supporting a term loan, running over the project's life with a DSCR schedule.

Who prepares CMA data?

Almost always the borrower's chartered accountant, working from the audited financials, the trial balance and the borrower's sales plan. The bank does not prepare it, and a bank officer who fills it in for a borrower has created a conflict the audit will find.

Can a bank reject a loan because of the CMA data?

It rarely rejects on the pack itself. What happens is that the pack gets returned for rework, or the assessed limit comes out well below what was asked for once the analyst re-derives the holding periods.

What is the difference between MPBF and drawing power?

MPBF is the limit the assessment supports, computed once at sanction from projected annual figures. Drawing power is what the borrower can actually draw this month, computed from the latest stock and book-debt statement after margins. The borrower always gets the lower of the sanctioned limit and the DP.

Key takeaways

• CMA data is a convention, not a return. No regulator publishes the format, which is why every CA firm's template differs and every lender's checklist differs.
• Statement 4 is where the limit is really decided. Re-derive the holding periods from the audited columns before accepting the projected ones — two of three moving in the borrower's favour is the normal pattern.
• Statement 5 is arithmetic and therefore checkable. If the working capital gap does not equal TCA minus OCL from statement 4, the MPBF has been reverse-engineered.
• Statement 6 is the integrity test. The long-term surplus must reconcile to the movement in net working capital, or a sheet has been typed rather than computed.
• MPBF, sanctioned limit and drawing power are three different numbers. Confusing them is how accounts drift into SMA.
• Below ₹5 crore for MSEs, the turnover method usually applies and a full CMA pack is not the expected submission.

Most of the analyst hours in a CMA file go into moving numbers out of PDFs and locked spreadsheets and into a form the ratios can be recomputed from. YuSight's Financial Spreading module extracts and standardises the financials at 95.2% extraction accuracy, validated against a manual benchmark, computes the liquidity, leverage and turnover ratios, and traces every figure back to the source document and page — analyst-editable, so the judgement stays with the credit officer.

Watch YuSight spread a real balance sheet.

Sources

• RBI — Master Circular: Management of Advances (UCBs), RBI/2023-24/51, 25 July 2023
• RBI — Master Circular: Prudential Norms on Income Recognition, Asset Classification and Provisioning pertaining to Advances, RBI/2023-24/06
• RBI — Master Direction: Lending to the Micro, Small & Medium Enterprises (MSME) Sector, RBI/FIDD/2017-2018/56
• RBI — Guidelines on Loan System for Delivery of Bank Credit, RBI/2018-19/87, 5 December 2018
• Ministry of MSME — Udyam Registration portal
• Indian Bank — Common Loan Application Form for MSME Loans up to ₹1 crore