Question
A manufacturing borrower is sanctioned Cash Credit limit of ₹60 crore. During inspection, it is found that long-term investments of ₹15 crore have been made out of CC account, while current assets are only ₹70 crore and current liabilities are ₹55 crore. What is the most serious credit concern in this case?
Solution
Using working capital for long-term investment = classic funds diversion, high risk.
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