CMA data, explained for promoters

Your bank asked for CMA data and your accountant went quiet. Here is what it is, what it is for, and where files go wrong.

CMA stands for Credit Monitoring Arrangement. In practice it is a standard set of statements that translates your financials into the format a lender appraises in — two or three audited years, the current provisional position, and a set of projected years, plus the working-capital and ratio workings that sit underneath them.

What it is really doing

CMA data is not a formality your bank invented to slow you down. It is the document that converts "we need three crore" into a number a credit officer can defend in a note: how much stock you hold, how long your buyers take, what your own suppliers allow you, and therefore what limit the cycle genuinely requires. When the assessed figure and the asked figure differ, it is almost always the ask that was invented.

Where files go wrong

Three failures recur. The first is projections with no relationship to history — a business that grew twelve percent for three years projecting sixty, with no order book, no capacity addition and no explanation. The second is a balance sheet that does not tie to the returns already filed, which the lender will notice. The third is a working-capital cycle asserted rather than evidenced: if the statement says ninety days of stock, the stock statements have to say it too.

Projections are a commitment, not a wish

It is worth remembering that the projections you submit become the yardstick you are monitored against for the rest of the facility. Inflating them to justify a larger limit buys a bigger sanction and a harder renewal. Realistic numbers, defended properly, age better.

Who should prepare it

Anyone can fill the format. The value is in the judgement behind it — which is why the work sits with chartered accountants who have seen how the resulting note gets written on the other side of the table.