Working Capital & MPBF Assessment Calculator
What is the maximum working capital credit facility (Cash Credit / Overdraft) my company qualifies for under RBI institutional norms?
Financial Inputs
Choose Tandon Method II for corporate CMA limits >₹5 Cr, or Nayak Turnover method for fast MSME limits.
Sum of stock/inventory, sundry debtors, cash balances, and trade advances.
Trade creditors, statutory dues, and customer advances (do NOT include existing bank CC/OD limits).
Eligible MPBF Bank Finance
Under the Tandon Committee Method II, your indicative Working Capital debt capacity is approximately ₹350 Lakh.
Mandatory Promoter Margin (NWC)
₹2.00 Cr
Total Working Capital Gap
₹5.50 Cr
Indicative Current Ratio
1.33x
Key Financial Takeaways
- Under the Tandon Committee Method II, your indicative Working Capital debt capacity is approximately ₹350 Lakh.
- The enterprise must demonstrate internal net working capital (promoter margin) of at least ₹200 Lakh to support this limit.
- This structure provides an indicative Current Ratio of 1.33x, aligning with the institutional benchmark of 1.33x.
Worked Case Study & Financial Impact
Worked Practical Example:
For a company with ₹8.00 Cr Current Assets and ₹2.50 Cr Current Liabilities: WCG is ₹5.50 Cr. Minimum promoter margin (25% of TCA) is ₹2.00 Cr. The bank can sanction an MPBF of ₹3.50 Cr, yielding a healthy 1.33x Current Ratio.
Strategic Credit Meaning:
MPBF establishes the regulatory lending ceiling. Banks will not sanction working capital limits beyond this amount unless backed by special promoter margin concessions.
Variables Influencing Your Credit Sanctions:
- Debtor Turnover Days: Faster invoice realization lowers required working capital gap.
- Creditor Terms: Extended supplier credit reduces the gap, but excessive creditors erode supplier credibility.
- Net Working Capital (NWC): Strong retained earnings ensure your enterprise meets the mandatory 25% margin.
Frequently Asked Questions
What is the difference between Nayak and Tandon methods?
The Nayak Committee formula is primarily used for MSMEs with turnovers up to ₹5 Crore, assessing debt capacity simply as 20% of annual turnover. Tandon Method II is mandated for larger credit limits, evaluating actual audited current assets and liabilities.
Why must bank borrowings be excluded from Current Liabilities in Tandon Method II?
Because the MPBF formula is specifically designed to calculate how much total bank debt is permissible to bridge the working capital gap. Including existing bank debt would distort the net requirement.
What is the minimum current ratio expected by banks under MPBF?
Tandon Method II is mathematically structured so that if the full MPBF is availed and promoter margin is maintained, the resulting benchmark Current Ratio will be precisely 1.33:1.
Related Financial Calculators
View All Tools →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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