Regulation of Bank Finance^443
of stock, book-debts etc. as per bankís extant guidelines. However, the care
has to be taken for fixation of the ìmarginî to ensure that against the adequate
holding of stocks, book-debts etc., the aggregate drawing power does not become
short of the Line of Credit, i.e., the outer limit fixed for total working capital
limit. In other words, the existing discrepancy of the drawing power usually
being less than the MPBF should not happen while working out the drawing
power under the proposed DBFómethod.Categorisation of Borrowers According to Size of Working Capital Finance
- For Non-SSI borrowers requiring working capital finance over Rs. 2.00
lacs and upto Rs. 10.00 lacs from the banking system: Considering size of
the limit (extent of funded W/Cófinance) required by such borrowers, and
also the operational vagaries these borrowers are constrained to face and as
also their en mass contribution to micro-level economic strata, the Committee
proposed a simplified turnover-based method of perceiving W/C credit
requirement for such borrowers as per the Annexure- - For Non-SSI borrowers requiring working capital finance over Rs. 10.00
lacs and upto Rs. 500.00 lacs, and SSI borrowers requiring working capital
finance over Rs. 200-00 lacs but upto Rs. 500.00 lacs from the banking
system: For this segment of the borrowers also, the Committee proposed to
adopt turnover based method of perceiving W/C credit requirement.
Nevertheless, since this segment of borrowers are pre-supposed to have a
better data base of their operations and of financial health and, size of the limit
to these borrowers demands a high level of bank-exposure, the committee
proposed relatively detailed analysis and supervision. Therefore, the method
enunciated as per the Annexure-2 is proposed. - For all borrowers requiring W/C finance over Rs. 500.00 lacs but upto
Rs. 1000.00 lacs (for both SSI as well as Non-SSI borrowers) from the
banking system: The borrowers requiring the above said size of limit are either
corporate or likely to graduate to corporate-constitution in near future and, as
such, are believed to have a better data-base of their operations. Moreover, the
aggregate of the limits under the above said size puts the bankís exposure as a
whole at a substantial level. Therefore, the committee proposed that assessment
of working capital finance within this size of limit should continue to be on the
basis of holding of Current Assets/Liabilities at present and later on switch
over to the method of Cash Deficit financing when it is stabilised fully of higher
scale of working capital finance. Accordingly, the Annexure- - For all borrowers requiring W/Cfinance over Rs. 1000.00 lac (for both
SSI as well as Non-SSI borrowers) from the banking system: The borrowers,