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COMMITTEE
by:-VIVEK KHETAN
WORKING CAPITAL
TANDON COMMITTEE
Recommendations
Method 1: MPBF=0.75(CA-CL)
Method 2: MPBF=0.75(CA)-CL
Method 3: MPBF=0.75(CA-CCA)-CL
CA- current asset, CL- current liabilities,
CCA- core current assets (permanent component of working
capital).
Current liabilities Rs. Rs. Current Assets Rs. Rs.
Particulars (Rs.)
Second Method
Particulars
(Rs.)
Gross current Asset 1110
Less: 25% of the above from
Long-term sources 276
834
Less: Current Liabilities
(Other than bank borrowings) 450
Maximum permissible bank Finance 384
Actual bank borrowing 600
Excess borrowing 216
Third Method
Particulars (Rs.)
Gross current Asset 1110
Less: Core current Assets 285
Real current Asset 825
Less: 25% of the above from
Long-term sources 207
618
Less: Current Liabilities
(Other than bank borrowings) 450
Maximum permissible bank Finance 168
Actual bank borrowing 600
Excess borrowing 432
Chore committee
Chore Committee
charging additional one per cent interest over the normal rate on
these limits.
6. The banks should fix separate credit limits for peak level and
7. Banks should take steps to convert cash credit limits into bill