Académique Documents
Professionnel Documents
Culture Documents
09.07.07
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4. Eligible working capital limit (EWCL) method in case of
non-SSI borrowers seeking working capital limits of above
Rs.2 crores from the banking system but upto and inclusive
of Rs.20 crores from the Bank. (For SSI/SSSBE borrowers
seeking fund based limits of over Rs.5 crores and upto and
inclusive of Rs.20 crores).
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assessed through simplified procedure for less than Rs.25
lakhs, Liberalised Trade Finance for less than Rs.25 lakhs
and in the case of rehabilitation of sick/weak units.
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wherever the borrower suffers
temporary setback leading to loss in
any one year. This need not be treated
as a deviation for which approval of
the higher authorities is required.
For new units/venture, item Nos. (i), (ii), (iii) and (iv) may be
on the basis of projected figures
Overall compliance to basic financial parameters
i) While it may be ideal to look for sound financial
parameters say, current ratio at 1.33, low TOL/
TNW ratio, strong security position etc. in practice
it may not always be possible to get borrowers all of
whose financial parameters strong. In view of this,
one of the parameters may be relaxed by the
sanctioning authority, if other financial parameters
have stronger values within the prescribed bands.
In other words, all the basic financial parameters
accepted for sanctioning the credit facilities should
collectively satisfy proper risk management
standards.
ii) However, in case of existing borrowers, whose
dealings are satisfactory and limits are fully secured
by way of mortgage of fixed
assets/deposits/KVP/NSC/surrender value of Life
Insurance Policies, sanctioning authorities may
renew the limits even if more than one of the basic
parameters are not complied with and in case any
enhancement is involved clearance from the next
higher authority shall be obtained.
iii) The deviations in other cases may be permitted by the
next Higher Authority, if required on merits of each
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case and having due regard to the business
expediency.
iv) In the case of ED/CMD/MC sanctions, the respective
sanctioning authorities may permit deviations.
I. Turnover Method:
The Working Capital requirements of the borrowers, both in the
SSI as well as Non-SSI Sector, shall be assessed under Turnover
Method (except in the cases where the simplified procedure as
above is adopted) as follows:
(a)Projected Annual Gross Sales (Turnover)
________
(b) Working Capital Finance requirement at 25% of (a)
________
(c) Minimum Margin to be brought in by the borrower at 5%
for SSI & 6.25% for non SSI of (a)
or actual NWC, whichever is higher
________
(d) Working Capital Finance Permissible (b - c)
________
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assessed under EWCL Method also and may be sanctioned limits
as eligible under EWCL method.
i) Estimation of Production/Sales:
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This should be examined against the borrower's production
capacity, past actuals and market trends.
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record of fulfilling the specified norms/covenants – financial &
performance related – can opt for the assessment under Cash
Budget Method.
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