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Banking > Lendings > Domestic Lendings > Committees >
Nayak Committee
The Nayak Committee
The recommendations made by Tandon Committee and reinforced by Chore Committee were
implemented in all Banks and a substantial improvement was observed. However, the
recommendations were perceived as too strict by the industry and there has been a
continuous clamor from the Industry for movement from mandatory control to a voluntary
market related restraint. In particular, it has been felt that the sophisticated approach
adopted by the Banks under Tandon Committee was too much to handle for small industries.
Another study group named Nayak Committee under the Chairmanship of Sh.P.R.Nayak looked
into the problem. This Committee restricted itself to the needs of the borrowers running
Small Scale Industry and with credit needs upto Rs.50 lacs only (since raised to Rs. 4
crores w.e.f 14.7.98). The committee suggested a very simple approach to computation of
working capital requirements of such borrowers. 25% of the annual turnover of such a
borrower is taken as his working capital requirements out of which at least four-fifth has
to come from Bank finance. In other words, borrowers are eligible for working capital
finance to an extent of 20% of their annual turnover. The recommendations have been
implemented in 1993.
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