📢 Too many exams? Don’t know which one suits you best? Book Your Free Expert 👉 call Now!
  • google app store apple app store
    • ✖

      Question

      Under the simplified procedure for working capital

      finance to Micro and Small Enterprises (MSEs) with working capital limits of up to ₹5 crore, the working capital limit is computed based on:
      A 10% of the projected annual turnover Correct Answer Incorrect Answer
      B 15% of the projected annual turnover Correct Answer Incorrect Answer
      C 20% of the projected annual turnover Correct Answer Incorrect Answer
      D 25% of the projected annual turnover Correct Answer Incorrect Answer
      E 30% of the projected annual turnover Correct Answer Incorrect Answer

      Solution

      As per RBI guidelines, for MSE units requiring working capital limits up to ₹5 crore, banks follow a simplified method of assessment. • The working capital limit is fixed at 20% of the projected annual turnover of the enterprise. • This streamlined approach reduces compliance burden for small units and ensures faster access to credit. • For larger enterprises (above ₹5 crore), working capital is generally assessed using the traditional methods such as the Nayak Committee norms or detailed cash flow-based analysis. Thus, the correct working capital computation is 20% of projected annual turnover.

      Practice Next
      More Accounts Questions

      Relevant for Exams:

      ask-question