The document discusses the history and evolution of working capital finance regulation in India. Key points include: [1] The Tandon Committee of 1974 established norms for determining working capital needs and permissible bank financing levels. [2] Subsequent committees like Chore and Dahejia made additional recommendations around monitoring borrowers and assessing needs based on operations rather than just security. [3] Current practice involves assessing needs through projected balance sheets, cash budgets or turnover, with an emphasis on loan systems over cash credits for meeting needs.
Portfolio revision, securities, New securities, existing securities, purchases and sales of securities, maximizing the return, minimizing the risk, Transaction cost, Taxes, Statutory stipulations, Intrinsic difficulty, commission and brokerage, push up transaction costs, reducing the gains, constraint, Taxes, capital gains, long-term capital, lower rate, Frequent sales, short-term capital gains, investment companies, constraints, established, objectives, skill, resources and time, substantial adjustments, mispriced, excess returns, heterogeneous expectations, better estimates, generate excess returns, market efficiency, little incentive, predetermined rules, changes in the securities market, Performance measurement, Performance evaluation, superior or inferior, small investors, better performance, prompt liquidity, comparative performance, purchase and sale of securities.
A powerful presentation on non performing assets which very much influencial when presented before others. Being a law student, I myself created the presentation and presented before the elite authorities which impressed them to a larger extent.
All related information about capital market instruments such as debt instruments, equity instruments, insurance instruments, hybrid instruments, swaps etc.
Debentures its types and Methods of Redemption of DebenturesGyananjaya Behera
This slides are the presentation of Debentures and its types and various types of Redemption of Debentures Methods and the various sources of redemption. All the details are mentioned in short for the presentation purpose.
Portfolio revision, securities, New securities, existing securities, purchases and sales of securities, maximizing the return, minimizing the risk, Transaction cost, Taxes, Statutory stipulations, Intrinsic difficulty, commission and brokerage, push up transaction costs, reducing the gains, constraint, Taxes, capital gains, long-term capital, lower rate, Frequent sales, short-term capital gains, investment companies, constraints, established, objectives, skill, resources and time, substantial adjustments, mispriced, excess returns, heterogeneous expectations, better estimates, generate excess returns, market efficiency, little incentive, predetermined rules, changes in the securities market, Performance measurement, Performance evaluation, superior or inferior, small investors, better performance, prompt liquidity, comparative performance, purchase and sale of securities.
A powerful presentation on non performing assets which very much influencial when presented before others. Being a law student, I myself created the presentation and presented before the elite authorities which impressed them to a larger extent.
All related information about capital market instruments such as debt instruments, equity instruments, insurance instruments, hybrid instruments, swaps etc.
Debentures its types and Methods of Redemption of DebenturesGyananjaya Behera
This slides are the presentation of Debentures and its types and various types of Redemption of Debentures Methods and the various sources of redemption. All the details are mentioned in short for the presentation purpose.
This is a useful template depicting the analytical method used by Banks & Financial Institution to assesse the working capital requirement of Customer.
History of Non-Banking Financial Companies Classification of Non-Banking Co...Mohammed Jasir PV
History of Non-Banking Financial Companies
Classification of Non-Banking Companies
Classification of Activities of NBFC
Fund Based Activities
Fee Based Activities
Concepts, Growth and Trends of Fee Based And Fund Based Activities.
CMA data is known as Credit Monitoring Arrangement. It is the financial report that shows the projected and past performance of business in the terms of finance. Many banks and financial bodies ask the borrower to make a credit monitoring arrangement to recognize the funds of application and the flow in the business. It consists of all the metrics and needed financial ratio to aid financial analysts.
CMA data is known as Credit Monitoring Arrangement Data. It is the financial report that shows the projected and past performance of business in the terms of finance. Many banks and financial bodies ask the borrower to make a credit monitoring arrangement to recognize the funds of application and the flow in the business.
CMA data is known as Credit Monitoring Arrangement Data. It is the financial report that shows the projected and past performance of business in the terms of finance. Many banks and financial bodies ask the borrower to make a credit monitoring arrangement to recognize the funds of application and the flow in the business. It consists of all the metrics and needed financial ratio to aid financial analysts.
CMA data is known as Credit Monitoring Arrangement. It is the financial report that shows the projected and past performance of business in the terms of finance. Many banks and financial bodies ask the borrower to make a credit monitoring arrangement to recognize the funds of application and the flow in the business.
Falcon stands out as a top-tier P2P Invoice Discounting platform in India, bridging esteemed blue-chip companies and eager investors. Our goal is to transform the investment landscape in India by establishing a comprehensive destination for borrowers and investors with diverse profiles and needs, all while minimizing risk. What sets Falcon apart is the elimination of intermediaries such as commercial banks and depository institutions, allowing investors to enjoy higher yields.
The Evolution of Non-Banking Financial Companies (NBFCs) in India: Challenges...beulahfernandes8
Role in Financial System
NBFCs are critical in bridging the financial inclusion gap.
They provide specialized financial services that cater to segments often neglected by traditional banks.
Economic Impact
NBFCs contribute significantly to India's GDP.
They support sectors like micro, small, and medium enterprises (MSMEs), housing finance, and personal loans.
Introduction to Indian Financial System ()Avanish Goel
The financial system of a country is an important tool for economic development of the country, as it helps in creation of wealth by linking savings with investments.
It facilitates the flow of funds form the households (savers) to business firms (investors) to aid in wealth creation and development of both the parties
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how to sell pi coins in all Africa Countries.DOT TECH
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The European Unemployment Puzzle: implications from population agingGRAPE
We study the link between the evolving age structure of the working population and unemployment. We build a large new Keynesian OLG model with a realistic age structure, labor market frictions, sticky prices, and aggregate shocks. Once calibrated to the European economy, we quantify the extent to which demographic changes over the last three decades have contributed to the decline of the unemployment rate. Our findings yield important implications for the future evolution of unemployment given the anticipated further aging of the working population in Europe. We also quantify the implications for optimal monetary policy: lowering inflation volatility becomes less costly in terms of GDP and unemployment volatility, which hints that optimal monetary policy may be more hawkish in an aging society. Finally, our results also propose a partial reversal of the European-US unemployment puzzle due to the fact that the share of young workers is expected to remain robust in the US.
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There is no set date for when Pi coins will enter the market.
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Exploring Abhay Bhutada’s Views After Poonawalla Fincorp’s Collaboration With...beulahfernandes8
The financial landscape in India has witnessed a significant development with the recent collaboration between Poonawalla Fincorp and IndusInd Bank.
The launch of the co-branded credit card, the IndusInd Bank Poonawalla Fincorp eLITE RuPay Platinum Credit Card, marks a major milestone for both entities.
This strategic move aims to redefine and elevate the banking experience for customers.
Empowering the Unbanked: The Vital Role of NBFCs in Promoting Financial Inclu...Vighnesh Shashtri
In India, financial inclusion remains a critical challenge, with a significant portion of the population still unbanked. Non-Banking Financial Companies (NBFCs) have emerged as key players in bridging this gap by providing financial services to those often overlooked by traditional banking institutions. This article delves into how NBFCs are fostering financial inclusion and empowering the unbanked.
2. Working capital
• It is an operating liquidity available to a
business.
• Along with fixed assets such as plant and
equipment, working capital is considered a part
of operating capital.
3. Regulation of bank finance
• Implemented by RBI in mid 1960s in order to
– Measure of discipline among industrial borrowers.
– Redirect credit to the priority sector of the economy
• RBI has been issuing guidelines and directives
to the banking sector toward this end.
4. Committees
• Important recommendations and directives have
stemmed from these groups.
– Tandon committee.
– Daheija committee.
– Chore committee.
– Marathe committee.
5. Tandon committee
• Reserve Bank of India setup a committee under the
chairmanship of Shri P.L. Tandon in July 1974.
• The practices of most of the banks are still influenced by
tandon committee recommendations though financial
liberalization occurred in 1990s.
6. Tandon committee
The terms of reference of the Committee were:
• 1. To suggest guidelines for commercial banks to follow up
and supervise credit from the point of view of ensuring
proper end use of funds and keeping a watch on the safety
of advances;
• 2. To suggest the type of operational data and other
Information that may be obtained by banks periodically from the
borrowers and by the Reserve Bank of India from the leading banks;
• 3. To make suggestions for prescribing inventory norms for
the different industries, both in the private and public sectors and
indicate the broad criteria for deviating from these norms ;
7. Tandon committee
• 4. To make recommendations regarding resources for
financing the minimum working capital requirements ;
• 5. To suggest criteria regarding satisfactory’ capital
structure and sound financial basis in relation to
borrowings ;
• 6. To make recommendations as to whether the existing
pattern of financing working capital requirements by cash
credit/overdraft system etc., requires to be modified, if
so, to suggest suitable modifications
8. Tandon committee
Recommendations
• Norms of current asset.
• Maximum permissible bank finance.
• Emphasis on loan systems.
• Periodic information and reporting system.
9. Tandon committee
Norms for current assets.
They defined the norms(15 industries) for
• Raw materials
• Stock in progress
• Finished goods
• Receivables
10. Tandon committee
Maximum permissible bank finance (MPBF)
Three methods for determining MPBF
• Method 1: MPBF=0.75(CA-CL)
• Method 2: MPBF=0.75(CA)-CL
• Method 3: MPBF=0.75(CA-CCA)-CL
CA- current asset, CL- current liabilities,
CCA- core current assets (permanent component of
working capital).
11. Tandon committee
Current Assets Rs.(in millions)
Raw material 18
Work in process 5
Finished goods 10
Receivables(including billsDiscounted) 15
Other current assets 2
—
50
—
Current Liabilities
Trade Creditors - 12
Other current liabilities - 3
Bank borrowings (including Bills discounted)- 25
—
40
—
MPBF for Mercury Company Limited as per above methods are:
Method 1: 075(CA-CL) = 075(50-15) = Rs.26.25 million
Method 2: 0.75(CA)-CL = 0.75(50)-15 = Rs.22.5 million
Method 3: 0.75(CA-CCA)-CL = 075(50-20)-15 = Rs.75 million
• Method 2 is adopted.
12. Tandon committee
Emphasis on loan system
Only a portion of MPBF must be cash credit
component and the balance must be in the form of
working capital demand loan.
Periodic information and report system.
• quarterly information system-form I
– Estimate production and sale for current and ensuring quarter.
– The estimate of current asset and liabilities for the ensuing
quarter.
13. • Quarterly information system-form II
– Production and sales during current year and for the
latest completed year.
– Asset and liabilities for the latest completed year.
• Half yearly operating statements- form III
– Actual and estimated operating performance for the
half year ended.
• Half yearly operating statements- form IIIB
– Actual and estimated sources and uses of funds for
the half year ended.
14. Chore Committee(1979)
This committee was formed by RBI to review the cash credit
system of banks.
The important recommendations of the Committee are as
follows:
1. The banks should obtain quarterly statements in the
prescribed format from all borrowers having working capital
credit limits of Rs. 50 lacs and above.
2. The banks should undertake a periodical review of limits of
Rs. 10 lacs and above.
15. Chore Committee
3. The banks should not bifurcate cash credit accounts into
demand loan and cash credit components.
5. Banks should discourage sanction of temporary limits by
charging additional one per cent interest over the normal rate
on these limits.
6. The banks should fix separate credit limits for peak level and
non-peak level, wherever possible.
7. Banks should take steps to convert cash credit limits into bill
limits for financing sales.
16. Marathe committee
A committee set up to review the licensing policy for new urban co-
operative banks. Headed by S. S. Marathe of the Reserve Bank of
India (RBI) Board, the committee’s prescriptions submitted in May
1992, favour a liberal entry policy and include :
• Establishment of new urban co-operative banks on the basis of
need and potential, and achievement of revised viability norms. The
one-bank-per-district approach is to be discarded.
• Achieving prescribed viability norms in terms of share capital, initial
membership and other parameters within a specified time.
• Introduction of a monitoring system to generate early warning
signals and for the timely detection of sickness.
17. Dahejia committee(1968)
• Existing deficiencies.
– It is the borrower who decides how much would borrow, the
banker does not decide how much he would lend and is,
therefore not in a position to do credit sales.
– The bank credit is treated is considered s first source of finance.
– Amount of credit extended is based on the amount of securities
available and not the level of operations of the borrower.
18. Present practice
Assessment of working capital requirement.
• Projected balance sheet method.
• Cash budget method
• Turnover method
Current ratio norm.
• 1.33 is considered only as benchmark and banks do
accept a lower current ratio.
19. Present practice
Emphasis on loan system
• Bulk of the working capital limit is in the form of working
capital demand loan and only a small portion in cash
credit component.
Financial follow up results
• FFR I- simplified form of form II used under tandon. Has
to be submitted on quarterly basis.
• FFR II- simplified form of form III. Has to be submitted in
half yearly basis.