Module: General Practice
Q50: The "Daheja Committee" (1969) is historically significant in Indian banking for introducing which fundamental concept regarding Working Capital finance?
✅ Correct Answer: B
The Daheja Committee (1969) was the first to analyze the tendency of industry to use short-term bank credit for acquiring long-term assets.
It identified that a certain portion of working capital is permanently locked up in the business to support minimum inventory and receivables.
This is termed "Hard Core Working Capital" and should be financed by long-term sources (like equity or term loans), not short-term bank overdrafts.
Only the seasonal or fluctuating part should be financed by bank cash credit.
It identified that a certain portion of working capital is permanently locked up in the business to support minimum inventory and receivables.
This is termed "Hard Core Working Capital" and should be financed by long-term sources (like equity or term loans), not short-term bank overdrafts.
Only the seasonal or fluctuating part should be financed by bank cash credit.