Tandon Committee Working Capital (Method I & II) Calculator
What is my Maximum Permissible Bank Finance (MPBF) under Tandon Committee Method II required for corporate banking CMA appraisals?
Financial Inputs
Sum of inventory, trade receivables, cash balances, and other operating current assets.
Trade creditors, statutory dues, and advances from customers (exclude short-term bank borrowings).
Permanent minimum current assets required for continuous factory operations.
MPBF (Tandon Method II — Corporate Standard)
Under standard Tandon Method II (bank syndicate appraisal), your Maximum Permissible Bank Finance (MPBF) is ₹350 Lakh.
MPBF (Method I — Lenient)
4,12,50,000
Required Long-Term Net Working Capital (NWC)
2,00,00,000
Working Capital Gap (WCG)
5,50,00,000
Key Financial Takeaways
- Under standard Tandon Method II (bank syndicate appraisal), your Maximum Permissible Bank Finance (MPBF) is ₹350 Lakh.
- This requires your company to demonstrate internal Net Working Capital (NWC) of at least ₹200 Lakh (25% of Total Current Assets).
- If appraised under the more lenient Method I, your facility eligibility increases to ₹412.5 Lakh with a ₹137.5 Lakh margin contribution.
Frequently Asked Questions
What is the difference between Tandon Method I and Method II?
In Method I, the borrower contributes 25% of the Working Capital Gap (WCG) from long-term sources, resulting in a lower NWC requirement and higher bank finance (Current Ratio ~1.17x). In Method II, the borrower must fund 25% of Total Current Assets (TCA) from long-term capital, resulting in stronger liquidity (Current Ratio >= 1.33x). Method II is mandated by Indian banks for credit facilities >₹5 Crore.
Can unsecured loans from promoters be counted as Net Working Capital (NWC)?
Yes, if unsecured loans from directors or promoters are formally subordinated to the bank facility and backed by a non-withdrawal undertaking during the tenure of the facility, banks accept them as part of the promoter margin.
Calculators on this platform provide indicative mathematical estimations based on industry-standard financial appraisal models (including Tandon Committee Method II, Nayak Turnover Method, and standard compound amortisation).
They do not constitute a formal facility sanction, credit commitment, or legal advisory from SME PAISA or any partner banking/NBFC institution. Final terms, interest margins, security stipulations, and credit sanctions remain strictly subject to formal credit appraisal, audited balance sheet verification, CMA Data assessment, and risk committee approval by institutional lenders.
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