10 November 2009
Hi Vijay, CC is meant to meet the borrowers working capita gap. So this is based on the computation of working capital requirement, i.e. Current Assets - Current Liabilities.
Then Bank calculates the Maximum permissible Bank Finance on the basis of Margin Amount to be paid or sourced by the borrower.
Another approach is a 20% of Turnover can be considered as working capital requirement. So turnover must be > 50 laks for a 10 laks cc limit beside the Working capital computation by CA-CL formula.
Another approach is a 20% of Turnover can be considered as working capital requirement. So turnover must be > 50 laks for a 10 laks cc limit beside the Working capital computation by CA-CL formula.
CAclubindia
