Lending norms of banks

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

21 September 2011 I wnat to know the method of lending genrally follwed by banks in India regarding working capital financing. We go with an example of a trading concern with a working capital requirement of 50 Lacs and having a projected turnover of Rs.3.00 crores annually. What I understand from Tandon Committee recommendations, that the promoter has to source atleast 25% of total current assets and the rest 75% will be met by Bank Finance and current Liabilities. Now what would constitute TCA. Whether Cash Balance, money at short notices, and other current assets (against which no finance/drawing power is allowed) will not be included in TCA. At our place one bank is including all current assets in TCA, whereas in one of the banks, they are not including all these in TCA. I wnat to know, what is the generally followed lending criteria in this regard. An early reply from respected experts would bve highly appreciated.

VISHRUT

VISHRUT (Expert)
Follow

21 September 2011 Your view is correct.

In general Terms :
Cash Balance, money at short notices, and other current assets (against which no finance/drawing power is allowed) will be included in TCA.

Message likes : 1 times