Credit Limit
Short definition
A credit limit is the contractual maximum principal. The drawable amount sits below that cap where collateral, covenants or internal bank authority are tighter.
Detailed explanation
Facility limit, sub-limits (cash, L/C, guarantees) and a group cap are separate layers. An FX limit can breach or undershoot the local-currency cap as the rate moves.
A larger limit is not more capacity; DSCR and leverage caps still bind. An uncommitted line is not a limit.
Why it matters for the CFO
Headroom and interest are read from drawn and drawable balances, not from the headline limit.
How to read it
The gap between the signed cap and the effective cap is unused “ghost” capacity. FX and collateral move that gap day by day.
Numerical example
Signed limit 150 mn TL, collateral cap 120, covenant cap 100 → effective cap 100 mn TL.
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Definitions are educational. They are not investment, credit or tax advice.