MANAGEMENT

Detailed explanation-1: -Upto which amount working capital can be assessed and sanction under Nayak Committee/ Turnover method? The method is applicable for financing MSME units upto Rs. 5 crores and for others upto Rs. 2 crores.

Detailed explanation-2: -As per Nayak Committee Report, working capital limits to SSI units is computed on the basis of minimum 20% of their estimated turnover up to credit limit of Rs. 5crore. For more details paragraph 4.12.

Detailed explanation-3: -MPBF = 75% of (Current assets – Current liabilities other than bank borrowings) The minimum current ratio under this method works out to 1: 1.

Detailed explanation-4: -As per this method, the working capital requirement is to be assessed at 25% of the projected turnover to be shared between the borrower and the bank, viz. borrower contributing 5% of the turnover as net working capital (NWC) and bank providing finance at a minimum of 20% of the turnover.