Module: General Practice
Q178: Consider the following assertion and reason regarding the "Chore Committee" (1979) norms.
Assertion (A): The Chore Committee emphasized that large borrowers must finance a part of their current assets from long-term sources (Core Current Assets).
Reason (R): The committee aimed to reduce the dependence of large industry on bank finance and enforce financial discipline through the Quarterly Information System (QIS).
Reason (R): The committee aimed to reduce the dependence of large industry on bank finance and enforce financial discipline through the Quarterly Information System (QIS).
✅ Correct Answer: A
The banking system in the 1970s was stretched, and the Chore Committee wanted to stop corporates from using cheap bank money for everything (Reason). To achieve this independence, the committee mandated that borrowers must bring in their own long-term funds (Equity/Debentures) to cover the "Core" portion of current assets (Assertion). The requirement to bring in long-term funds was the direct method to achieve the reduced dependence on banks.