## Drawing Power (DP)
### Meaning
Drawing Power is the maximum amount a borrower can withdraw from the working capital limit sanctioned by the bank.
### Drawing Power vs. Sanctioned Limit
| Drawing Power | Sanctioned Limit |
|---|---|
| Calculated based on primary security less margin on a particular date | Total exposure the bank can take on a particular client (for CC, OD, etc.) |
The account must be kept within both the drawing power and the sanctioned limit.
---
### Bank Duties Relating to Drawing Power
Stock Statement Age:
- Stock statement should not be older than 3 months.
- If older than 3 months → account is deemed "Irregular".
Stock Audit:
- Bank should carry out stock audit for all accounts having funded exposure above the prescribed score/limit.
---
### Calculation of Drawing Power
```
Stock [at NRV (Net Realisable Value)] XXX
Less: Unpaid Stock
(a) Unpaid Creditors (XXX)
(b) Acceptances / LC (XXX)
______
XXX
Less: Margin on Stock (XXX)
______
Stock DP Component XXX
Add: Debtors XXX
Less: Ineligible Debtors (XXX)
______
XXX
Less: Margin on Debtors (XXX)
______
Debtors DP Component XXX
Total Drawing Power = Stock DP + Debtors DP
```
> Key Principle: Only paid stock and eligible debtors form the basis for drawing power. Unpaid creditors, LC-backed stock, and ineligible debtors are excluded before applying the margin.