Module: General Practice
Q32: Under the "Turnover Method" of assessment recommended by the Nayak Committee (and mandated by RBI for MSE units requiring limits up to ₹5 crore), what is the minimum calculated Working Capital Fund Based Limit provided by the bank?
✅ Correct Answer: B
The Nayak Committee simplified working capital assessment for small units (MSEs). The committee estimated the total working capital requirement at 25% of the projected annual turnover.
This total requirement is split into two parts: Bank Finance, which is 20% of the turnover (this is the loan amount), and Promoter's Margin, which is 5% of the turnover (this is the borrower's contribution). This method avoids complex balance sheet analysis for small businesses, relying strictly on sales projections.
This total requirement is split into two parts: Bank Finance, which is 20% of the turnover (this is the loan amount), and Promoter's Margin, which is 5% of the turnover (this is the borrower's contribution). This method avoids complex balance sheet analysis for small businesses, relying strictly on sales projections.