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Working Capital Finance Ques
What is the primary purpose of working capital finance provided by banks?
Working capital finance is provided to meet the day-to-day operational requirements of a business, including procurement of raw materials, payment of wages, and funding of work-in-progress and debtors.
What is the Dahejia Committee recommendation regarding working capital assessment?
Recommended lending based on cash flow and not assets.
Which RBI committee recommended the Maximum Permissible Bank Finance (MPBF) method for assessing working capital limits?
The Tandon Committee (1975) recommended the MPBF method, which was later modified by the Chore Committee (1979) to strengthen credit discipline.
What is the minimum Net Working Capital (NWC) margin required under Tandon Committee Method II?
Borrower must contribute at least 25% of total current assets.
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