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(^412) Financial Management
sales of capital equipment on deferred payment terms). The undue delay in the settlement
of bills by governments could be discouraged by stipulating that the latter should pay
interest on bills if they were not paid within 90 days after their receipt.
Commitment Charges on Unutilised Limits
As a complementary measure to check the extension of extra credit, the group suggested
that a levy of commitment charge on unutilised limited coupled with, if necessary, a
minimum interest charge could be considered. The commitment levy might be
progressively raised with the size of the unutilised limits. As the initial stages, limits
sanctioned upto Rs. 10 lakhs might be exempted from the point of view of administrative
convenience.
Need for Greater Recourse to Bill Finance
The Study Group emphasised the need for greater recourse to bill finance. The Group
recommended that commercial banks, industry and trade should try, where feasible and
administratively convenient, to initiate and develop the practice of issuing usance bills
as this would not only impose financial discipline, on the purchaser but also help supplier
or producer to plan his financial commitments in a realistic manner. An adequate growth
in the volume of usance bills would also facilitate the development of a genuine bill
market in India. With a view to encouraging the development of such bill market a
reduction in the stamp duty on usance bill was recommended by the Group to the
government. The Group believed that the loss in revenue following a reduction in stamp
duty would be more than made good by the resultant larger volume of usance bills.
Inventory Control
With regard to inventory control, the Group considered that as an integral part of
restraining the demand for bank credit by industry, adequate attention should be paid to
the question of adequacy or otherwise of stocks of inventories held by various industries
and the scope for minimising the stocks needed by industry.
Implications
Financial discipline implicit in Dehejia Study Group was intended to help the corporate
and other borrowers in formulating financial plans, regulating production on a more
rational basis and economising the demand for bank credit. As regards banks, a periodical
release of the part of the resources otherwise locked up in ëroll overí cash credit/
overdraft to industry would enable them to meet to this extent further demands of
priority sectors of the economy and to diversify their loan transactions. This, in turn,
would increase the scope for mobilisation of deposits. Commercial banks would thus be
able to play a more effective role in serving the community and the ends of social
justice.