Clim Limited is enjoying cash credit facility sanctioned from Ludhiana branch of DDL Bank for 300 crore. However, for practical considerations,…

Sometimes, a customer is sanctioned a cash credit limit at one branch but is authorised to utilise such overall limit at several other branches also, for each of which a sub-limit is fixed. In such a case, the determination of status of the account as NPA or otherwise should be determined at the limit-sanctioning branch with reference to the overall sanctioned limit/drawing power and not by each of the other branches where a sub-limit has been fixed. The auditor of the limit-sanctioning branch should examine whether it receives particulars of all transactions in the account at sub-limit branches and whether status of the account has been determined considering the total position of operation of the account at all concerned branches. The standalone matter of no credit transactions for more than 90 days as on 31st March, 2025 at Amritsar branch is irrelevant. Hence, keeping in view above, CA Krish should consider asset classification considering the total position of operation of the account at all concerned branches. Regarding sub-limits at branches, the classification adopted by the limit-sanctioning branch should be followed. Hence, the Amritsar branch has to follow asset classification made by the limit-sanctioning branch.