Working Capital

Working Capital

The working capital limits would be considered only after the project nearing completion and after ensuring full tie-up of the term loan requirements of the borrower. These limits would be either in the form of fixed loans or running accounts and / or bill financing facility. The finance extended under this category would be for meeting the funds requirements for day to day operations of the units i.e, to meet reccurring expenses such as acquisition of raw material, the various expenses connected with products, conversion of raw materials into finished products, marketing and administrative expenses, etc..

In tune with the Reserve Bank of India guidelines on Loan System for delivery of bank Credit for working capital purposes to larger borrowers, the same would be extended in the form of fixed loan (working capital Demand loan) and cash credit (running account) in the ratio of 60:40 in respect of borrowers enjoying aggregate working capital limits of Rs.10 crore and above from the Banking system. The working capital demand loan facility shall be for a minimum fixed term of 7 days subject to roll over at the option of the borrower concerned.

Eligible Working Capital Limits would be assessed by adopting various methods such as Projected Turnover Method, Permissible Bank Finance Method, Cash Budget Method and Net Owned Funds Method, depending upon the type of borrower, the aggregate working capital facility enjoyed from the banking system, the scale of operation, nature of activity/enterprise and the duration/ length of the production cycle, etc..

The working capital limits would require such security and personal/ third party guarantees as applicable to general lending norms of the bank and risk perception in respect of individual borrowal account.