MANAGEMENT

Detailed explanation-1: -This method is also called as ‘second method’). In this method of lending, the borrower has to arrange 25% of Total Current Assets (TCA) as margin. Illustration: Let us again take an example of the TCA of a company is Rs. 1000 and OCL is Rs.

Detailed explanation-2: -METHOD – II In Tandon’s Second method of lending the borrower has to arrange 25% of Total Current Assets (TCA) as margin.

Detailed explanation-3: -MPBF Method II: In this method, the borrower finances minimum of 25% of its total current assets out of long-term funds. The rest will be provided by the bank through MPBF. Thus, total current liabilities inclusive of bank borrowings could not exceed 75% of current assets.

Detailed explanation-4: -Tandon Committee introduced the concept of MPBF in the working capital finance by banker. The Committee suggested that bank should attempt to supplement the borrowers’ resources in financing the current assets.

Detailed explanation-5: -Tandon committee has made the following major recommendations: 1. Inventory and receivable norms: Borrower should maintain a reasonable level of current assets, particularly inventory and receivables to ensure rational allocation of resources and to avoid unwanted financing of current assets.