Every month, hundreds of thousands of businesses across India submit a document to their banks that directly affects their credit availability, working capital flow, interest charges, and even credit ratings—yet very few give it the attention it truly deserves.
We’re talking about the Drawing Power (DP) Statement.
In this issue, we break down why getting your DP right—every single time—is critical, and how Bankkeeping ensures that your DP is not just timely, but strategically sound and error-free.
What is a DP Statement?
A Drawing Power (DP) Statement is a monthly declaration submitted to banks by borrowers who have working capital limits (like Cash Credit, OD, or WCDL). It captures the latest figures for:
- Stock (raw materials, WIP, finished goods)
- Book debts (receivables)
- Creditors and other current liabilities
- Margin requirements
Using this, the bank calculates the Drawing Power, i.e., the amount you are eligible to withdraw from your sanctioned working capital limit for that month.
Drawing Power Right
Why is DP So Important?
DP is more than just a routine form—it directly controls your liquidity. If your eligible Drawing Power (based on submitted stock and debtor levels) is lower than your sanctioned limit, you can only draw up to the DP, not the full sanctioned amount. That means a misstep in your DP can block your own working capital, forcing you to either delay payments, borrow short-term funds at high cost, or lose business opportunities.
The Reality: Miscalculated DPs Are Shockingly Common
Across industries, it’s estimated that over 60% of SMEs submit error-prone or inconsistent DP statements. These errors usually include:
- Opening stocks are different from closing stocks submitted last month
- Double counting stocks or receivables
- Inclusion of ineligible or aged debtors
- Missing margin adjustments
- Misalignment with books of accounts
These errors do more than just reduce your DP. They create a perception of poor internal control in the eyes of the bank.
The Result:
- Downgrade of your Credit Score
- Additional margin calls
- Temporary freezing of limits
- Higher internal rating risk
- In some cases, interest rate loading of 0.25% to 1%
How Improper DP Affects Liquidity
Let’s look at a simple example:
Your sanctioned CC limit is ₹5 Cr. But due to misreporting in your DP, the bank calculates your eligible drawing power as ₹3.5 Cr.
Even if your business needs ₹4.5 Cr for vendor payments, you’re blocked at ₹3.5 Cr. You either: Miss payments or Delay orders. You may have to take informal credit at a higher interest rate. (often at 18–24% cost) Or draw in excess and invite penal interest. All this because one spreadsheet was not done correctly.
Poor DP May Trigger Covenant Breaches and Penal Charges
An incorrect or delayed DP submission can trigger a technical breach of financial covenants, such as:
- DP to outstanding ratio falling below threshold
- Stock audit mismatches
- Frequent overdraws due to incorrect data
- Banks treat this as a red flag, and may apply:
- Penal interest (1–2% on the overdrawn amount)
- Late submission penalties
- Temporary freezing of fresh disbursals
- Event-driven reviews of your entire loan facility
How Bankkeeping Helps in DP Creation—Month After Month
At Bankkeeping, we don’t just digitize DP creation—we redefine the entire process to ensure accuracy, timeliness, and compliance:
In-Built Bank Format Engine
Each bank has its own DP format and ratio logic. Bankkeeping maintains customized DP templates for major banks (PSU & private), so your submission is always in the expected format.
Auto-Validation Checks
Our system checks for:
- Ageing of debtors
- Negative stocks
- Margins not applied
- Receivable concentration limits
So you know the issues before the bank does.
Maker-Checker Model Ensures First-Time-Right DP
Unlike manual DP creation, which often lacks oversight, Bankkeeping has a two-layered Maker-Checker model.
Maker Layer
Your internal team uploads data on inventory and receivables using simple interfaces.
Checker Layer (Bankkeeping Experts)
Our credit analysts—many of whom are ex-bankers—review your DP before submission:
Spot errors
- Correlate with latest loan balances and sanction terms
- Flag inconsistencies with prior months or CMA data
- Result?
Your DP is clean, compliant, and credible before it ever reaches the banker’s desk.
Timely DP Submission—Every Month, On Time
Many borrowers face penalties simply because their DP was late. Bankkeeping’s automated task management engine ensures:
- Monthly DP reminders to your team
- Escalation workflows if delays occur
- DP approval calendar integrated with your finance team
- No more last-minute Excel scrambles. No more “We forgot this month.”
Why DP Management Should Be a Strategic Priority
If your DP is inaccurate, late, or non-compliant, your business suffers in silence:
- Liquidity shrinks
- Banker trust declines
- Internal ratings fall
- Borrowing cost increases
Yet, most companies spend more time tracking vendor invoices than getting their DP right.
With Bankkeeping, DP becomes a lever for better cash flow and better funding terms.
What Our Clients Say
One of our manufacturing clients was facing frequent liquidity crunches due to inconsistent DP. After shifting to Bankkeeping:
- DP accuracy improved by 100%
- Overdrawn interest dropped by ₹3.2 lakhs in 6 months
- Internal banker rating improved
- Access to WCDL enhanced
They didn’t change banks. They just changed how they managed their DP.
Take Charge of Your DP Today
Here’s how to get started:
Already on Bankkeeping? – Talk to your Relationship Manager to Set up your format & schedule
New to Bankkeeping? – Book a Demo Now
Need expert advice? Contact our Credit Execution Team for a consultation
Final Thought
Your DP speaks before you do. Make sure it speaks well. Make it accurate, compliant, and powerful—with Bankkeeping.