Credit Delivery Part 1 Ques

Credit delivery refers to the process by which banks channelize funds to borrowers in a structured, timely, and regulated manner to meet their financial needs while managing credit risk.

Bank finances 75% of current assets minus current liabilities.

A working capital loan is a short-term facility used to finance day-to-day operational needs like inventory and receivables, whereas a term loan is a long-term credit facility used for capital expenditure with a defined repayment schedule.

Bank finances 75% of net current assets (current assets minus current liabilities).

MPBF is a method prescribed by the Tandon Committee to calculate the maximum amount of bank credit permissible for working capital, computed as 75% of the shortfall between current assets and current liabilities (excluding bank borrowings).

Equitable charge on movable assets without transfer of possession to lender.

The Tandon Committee, set up by RBI in 1974, recommended the MPBF concept along with three methods for computing permissible bank finance for working capital needs.

Physical delivery of movable assets to lender as security for loan.