Drawing Power Calculation

Prepared By: Sanjok Bartaula


Drawing Power is calculated on the stock and book debt by reducing the margins as per banks norm. Drawing Power calculation sounds to be simple by definition. but it requires number of adjustment to be made before arriving at real Drawing Power of borrowers. following is the simple format for Drawing Power Calculation that can be applied on manufacturing concern and also on other cases with slight modification as per the requirement.

Drawing Power Calculation:

  1. A.     Physical Inventory (Stock)


Particulars Amount
Value of Stock as shown in stock statements as of 31.12.2012i)                    Raw materialii)                  Stock in process/stock in transitiii)                Stores and spares

iv)                Finished stock

Add: Stock given on job work
Less: Stock received on job work


  1. B.      Stock eligible for Drawing Power Calculation:


I)  Value of stocks as arrived at as per above statement
Less: unpaid stocks
Less: stock received under DA L/C/LG or under bills
Less: value of slow moving/obsolete stock
Less: Difference in value of stock between stock statement submitted by borrower to bank and stock as per excise register.
Total Stock eligible for DP Calculation
  1. C.      BOOK DEBTS:


Particulars Book-Debts up to 90 Days (as per banks norm)
Book-Debts as on 31.12.2012 up to 90 Days
Less: Book Debts not eligible for DP Calculation
Total Book-Debts eligible for DP Calculation
  1. D.    Calculation of Drawing Power:

Sr. No.



1. Stock
2. Book-Debts
Less: Margin (say @ 25%) on both Stock & Book Debts
  Total Drawing Power

2 Responses to Drawing Power Calculation


  2. Bipin says:

    why bank asked for loan and advance detail also? is there any requirement of this for calculation of DP ?

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