Home | ARTS | Financial Management | Chore Committee - Working Capital And Banking Policy

Financial Management - WORKING CAPITAL MANAGEMENT

Chore Committee - Working Capital And Banking Policy

   Posted On :  22.06.2018 12:27 am

Having implemented the recommendations of the Tandon committee, the RBI constituted another working group under the chairmanship of Shri K.B. Chore, Chief Officer, Department of Banking operation and development, RBI.

Chore Committee
 
Having implemented the recommendations of the Tandon committee, the RBI constituted another working group under the chairmanship of Shri K.B. Chore, Chief Officer, Department of Banking operation and development, RBI.

Terms of reference


The committee was asked to review the cash credit system in recent years with particular reference to the gap between sanctioned limit and the extent of their utilisation.

To suggest alternative types of credit facilities, which should ensure greater credit discipline and enable the banks to relate credit limits to increase in output or other production activities.

Recommendations


Continuation of existing credit


The existing system of three types of lending namely, cash credits, loans and bills should be retained.

No bifurcation of credit limit


Bifurcation of cash credit limit into a loan component and a fluctuating cash credit component has not found acceptance either on the part of the banks or the borrowers. Therefore the committee recommends withdrawing bifurcation of accounts.

Separate limit for peak and non-peak level requirements


The banks have been asked to fix separate credit limits wherever feasible for the normal non-peak level and peak level credit requirements and indicate the periods during which the separate limits would be utilised by the borrowers. If, however, there is no pronounced seasonal trend, peak-level and normal requirements should be treated as identical and limits should be fixed on that basis. It should be noted that peak-level and non-peak level concepts apply not only to agriculture-based industry but also to certain other consumer industries where the demand may have pronounced seasonal tendencies. Within the limits sanctioned for the peak-level and non-peak level periods the borrowers should indicate before the commencement of each quarter the requirements of funds during that quarters. The statement so submitted by the borrowers should form the basis for quarterly review of the accounts.

 

Submission of Quarterly Statements

 

The quarterly statements should be submitted by all the borrowers enjoying working capital limit of Rs.50 lakhs and above and they will have to bring gradual additional contribution based on second method of lending as prescribed by the Tandon Committee.

Tags : Financial Management - WORKING CAPITAL MANAGEMENT
Last 30 days 1328 views

OTHER SUGEST TOPIC