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Some other Banks like Bank of Baroda have preferred Cash Flow method of assessment of corporate requirements and are shifting to this method. Under Cash Flow Method, the corporate is required to project its cash receipts and expenditure. Whenever, the expenditure overshoots the incomes, the Bank finance steps in to fill the gap. Many other banks, however, have continued with the method of Maximum Permissible Bank Finance (MPBF) Bifurcation of Bank limits into two components i.e. Working Capital Demand Loan (fixed component) and Working Capital Cash Credit (variable component) has been mandated by Reserve Bank of India for larger borrowers. While other bank loans have to be provided at rates of interest not less than Prime Lending Rate (PLR), discounting the bills of exchange has been permitted by the RBI at a rate less than PLR.
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