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Financial Management - WORKING CAPITAL MANAGEMENT

RBI guidelines regarding working capital finance - Working Capital And Banking Policy

   Posted On :  22.06.2018 12:40 am

The concept of maximum permissible bank finance (MPBF) was introduced in November 1975 as part of implementation of the recommendation of the Tandon working group.

RBI guidelines regarding working capital finance
 
The concept of maximum permissible bank finance (MPBF) was introduced in November 1975 as part of implementation of the recommendation of the Tandon working group. Over the years, with the guidelines of Chore Committee, Marathee Committee and Kannan Committee various improvements had been brought about in the loan delivery system. Consistent with the policy of liberalisation made during 1990s, greater operational freedom has been provided to banks to evolve their own methods of assessing the working capital requirements of the borrowers within the prudential guidelines for financing working capital needs. Accordingly the RBI has withdrawn (w e f. 15th April 1997) the prescription in regard to assessment of working capital needs based on the concept of MPBF enunciated by Tandon Working group. So, Working Capital finance henceforth will be determined only by the banks according to their perception of the borrower and the credit needs. 
Tags : Financial Management - WORKING CAPITAL MANAGEMENT
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