Every business wants cheaper funds, more flexible terms, and greater access to credit. But what if one of the biggest levers to achieve this was something that’s usually treated as just a formality?
We’re talking about the Credit Monitoring Arrangement (CMA) report—a compliance document that, if used strategically, can lower your borrowing costs, improve your credit profile, and increase your working capital limits.
At Bankkeeping, we’ve seen firsthand how a well-prepared CMA can tilt negotiations in your favour—and how a poorly constructed one can quietly cost your business lakhs each year.
Understanding CMA: More Than a Regulatory Requirement
The CMA report is a standardized format prescribed by the Reserve Bank of India. Banks require it to assess your business’s creditworthiness, determine working capital needs, and track fund utilization.
A standard CMA includes:
- Historical & Projected Financials
- Operating Statements
- Fund Flow Statements
- MPBF (Maximum Permissible Bank Finance) Calculations
- Balance Sheets & Profit & Loss Projections
Banks use this as a blueprint to decide:
- How much to lend
- At what interest rate
- What kind of security or margin to ask for
- What kind of terms & conditions to levy on the borrower
- Whether to offer additional products like BGs, LCs, or WCDLs
- What kind of Guarantees shall be required
CMA data report
How a Properly Constructed CMA Helps You Reduce Cost of Funds
Most borrowers assume that CMA preparation is just “paperwork”—and delegate it to junior accountants, auditors, or even to the bank’s relationship manager (RM). Whereas we strongly feel that Management should themselves get involved and hire experts to do this.
Treating CMA as paperwork is a mistake that directly affects your interest rate and credit terms. Here’s why:
1. Accurate Fund Flow = Lower Working Capital Stress
If your fund flow assumptions are realistic and tailored to your industry cycle, your banker understands how you’ll use the money and when it will come back. This leads to:
- Reduced margin requirements
- Avoidance of high-interest short-term fixes
- Less reliance on unsecured borrowing
2. Right Projections = Lower Risk Perception
When your CMA shows a clear link between business growth, profitability, and fund usage, the bank sees lower credit risk—which means:
- Lower interest spreads over base rate
- Lesser collateral requirements
- Better chances of long-term facilities
3. Avoidance of Under- or Over-Leveraging
A good CMA ensures you’re not asking for too little (leading to working capital gaps) or too much (which increases scrutiny and cost). It balances your real need with your repayment ability—leading to optimal cost of capital.
4. Better Negotiation Position
A professionally constructed CMA shows the lender that you’re in control. It arms you with:
- A defendable borrowing plan
- Clear visibility on drawing power and DSCR
- Ability to push back against arbitrary interest hikes
5. Clean Ratios = Faster Sanctions
Most rejections or delays are due to flawed ratios in hastily prepared CMAs (like negative fund flow, poor debt-equity, overstated receivables). A strong CMA pre-empts these and keeps your proposal moving smoothly.
Why You Should Never Leave CMA to the Bank’s RM
It’s tempting to let the bank’s RM “handle” the CMA for you. After all, they’re supposed to help, right?
But here’s what really happens when you do that:
- You lose control of your story.
- The CMA becomes just a box-ticking document—not a strategic expression of your business plan.
- Your unique strengths are lost.
- RMs work with templates. They don’t understand your seasonal cycles, client base, or vendor cash terms. That nuance is key to getting better funding terms.
- You risk underreporting potential.
- An RM doesn’t care if your projections are conservative or aggressive. Their job is to process, not optimize.
- The CMA becomes a liability, not an asset.
- Poorly filled assumptions can result in higher interest rate loading or even rejections.
Bankkeeping: Turning CMA into a Strategic Asset
At Bankkeeping, we’ve built tools and processes that treat CMA preparation as a value-driver, not a compliance chore.
Here’s how we help you take control:
1. Real-Time Loan Data Integration
We fetch and analyze your existing CC, OD, BG, Term Loans and embed actual repayment schedules and limit usage in the CMA. No more copy-pasting or guesswork.
2. Dynamic Financial Modelling
We build forward-looking cash flow projections and working capital cycles aligned with your business realities—not template assumptions.
3. Management Discussion
We build CMAs, post a couple of rounds of discussion with you. You are the best judge of your business and what the future looks like. Your feedback helps in construction of a realistic looking CMA. It also helps you in understanding your projections and keeps you motivated to achieve the same.
4. Audit-Proof Documentation
Our CMA format is vetted by ex-bankers and analysts, making it ready for internal credit committees at both private and public sector banks.
5. Cost of Funds Optimizer
Our platform highlights which of your loans are expensive, underutilized, or redundant—giving you the ammunition to renegotiate or refinance.
6. Expert Oversight
Our credit analysts and former bankers review your CMA before submission, ensuring it reflects your strengths and mitigates your weaknesses.
Client Case Example: How One Exporter Saved ₹8.5 Lakhs
A mid-sized textile exporter using Bankkeeping revised their CMA under our supervision: ∙ Realigned projections to seasonal demand patterns
Highlighted under-leveraged receivables
Cleaned up fund flow mismatches
Outcome –
Reduction of interest rate from 11.25% to 9.80%
Limit enhanced by ₹1.5 Cr
Annual savings of ₹8.5 lakhs in finance cost
Your CMA Should Work As Hard As You Do
If you are spending time optimizing production, controlling costs, and chasing sales—do not let all that effort get diluted because your CMA did not reflect it.
Think of your CMA as your financial pitch deck to the lender. It should:
- Tell your story powerfully
- Project confidence backed by data
- Help the bank justify better terms for you
Letting someone else—especially the bank—own that narrative is like letting your competitor write your business plan. Take Charge with Bankkeeping Today
If you are already a Bankkeeping client:
- Schedule a free CMA review
- Explore the Cost of Funds Dashboard
- Let us show you how you can reduce your cost of funds starting this quarter.
- Contact your account manager
If you are not yet onboard:
- Book a Demo support@bankkeeping.com
Closing Thought
A good CMA doesn’t just get you a loan—it gets you the right loan, at the right price. Stop treating it as an obligation. Start using it as a competitive edge.