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    Question

    As per the Nayak committee, an MSME can avail working

    capital from a bank to the extent of ______ of its annual projected turnover?
    A 10% Correct Answer Incorrect Answer
    B 15% Correct Answer Incorrect Answer
    C 20% Correct Answer Incorrect Answer
    D 25% Correct Answer Incorrect Answer
    E 30% Correct Answer Incorrect Answer

    Solution

    The Nayak Committee was set up by the Reserve Bank of India in December 1991 to review the working capital requirements of small and medium-sized enterprises (MSMEs). The committee recommended that MSMEs should have 20% of their annual projected turnover as working capital.    Note - the working capital requirement of the MSME unit is calculated at 25% of the annual projected turnover. Out of the said Working Capital requirement:  

    • 5% requirement to be met by the borrower from his own sources, and   
    • the balance 20% to be financed by a lending bank    
    They also recommended that banks grant working capital to MSMEs, dispose of loan applications in a timely manner , and set up specialized bank branches for MSME loans.  

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