Working Capital Assessment in Madhepura

Local jurisdiction

Registrar (RoC)

RoC Patna — Maurya Lok Complex, Block-A, Western Wing, 4th Floor, Dak Bungalow Road, Patna – 800001

Jurisdictional HC

Patna High Court

GSTIN prefix

10 (Bihar)

Professional Tax

Bihar levies Professional Tax (max ₹2,500/year). Applicable to companies employing salaried staff.

Business hubs

Alstom Electric Loco Factory, Agri Mandi, Makhana

Madhepura hosts the Alstom electric-locomotive factory and a Kosi-region agri economy.

Also in: Saharsa Supaul

A working-capital assessment works out how much short-term finance your business needs to fund day-to-day operations — inventory, receivables and other current assets, net of trade credit. Banks size a cash-credit (CC) or overdraft (OD) limit from this assessment, most often using the Maximum Permissible Bank Finance (MPBF) methods of the Tandon Committee, or the Nayak Committee (turnover) method for smaller borrowers where the limit is broadly 20% of projected annual turnover. The assessment also covers the working-capital gap, operating cycle, holding levels, current ratio and drawing power, and is prepared to support your loan application.

MPBF

Maximum Permissible Bank FinanceThe core output of the assessment — the working-capital limit a bank can sanction, derived from your current assets, margin and the applicable committee method.

Understand It

What Is Working Capital Assessment?

A quick, plain-language explanation before the details.

In simple terms

A working-capital assessment estimates the short-term funds your business needs to run daily operations — funding inventory and receivables net of trade credit — and translates that into the cash-credit or overdraft limit a bank can sanction.

Legally

It is an advisory exercise, not a statutory filing. Banks assess working-capital limits using RBI-guided credit-appraisal norms and the Maximum Permissible Bank Finance (MPBF) methodology of the Tandon Committee, with the Nayak Committee (turnover) method commonly used for smaller borrowers.

Governing authority

There is no registering authority — the assessment is prepared for your lending bank or NBFC, which applies its own credit policy within the broad framework set by the Reserve Bank of India (RBI).

Validity

A working-capital limit is typically sanctioned for one year and reviewed at renewal, so the assessment is usually refreshed each year with updated financials and projections.

Service Intelligence

Quick Facts

Professional Fee

Custom quote

Service Type

Advisory

Purpose

CC / OD limits

Mode

100% Online

Methods

Tandon & Nayak

Key Output

MPBF & gap

Deliverable

Assessment note

Basis

Operating cycle

Legal & Regulatory Framework

Methodology

Tandon & Nayak

Key Metric

MPBF

Framework

RBI credit norms

For

CC / OD limits

Nature

Advisory

Last Reviewed

17 Aug 2026

Before You Start

Is This Service Right for You?

Ideal for

Businesses applying for a fresh cash-credit or OD limit
MSMEs seeking bank finance under the Nayak (turnover) method
Manufacturers and traders with inventory and receivable cycles
Growing businesses seeking enhancement of an existing limit
Borrowers renewing a working-capital limit at review
Firms preparing a loan file for a bank or NBFC

You may need this if

You want to know how much working-capital finance you can raise
A bank has asked for a working-capital / MPBF assessment
Your existing CC/OD limit is stretched and needs enhancement
You are unsure of your working-capital gap or drawing power
Your operating cycle has lengthened and cash is tight
You need a bank-ready assessment to support a loan application

Not sure if you need this?

Talk to an Expert →

Why It Matters

Why a Working Capital Assessment Matters

A sound assessment sizes your limit correctly, strengthens your loan file and keeps day-to-day operations funded. Here is why it matters.

01

Right-Sized Bank Limit

A correct MPBF computation helps you seek a cash-credit or OD limit that matches your actual need — neither under-funded nor over-leveraged.
02

Fund the Operating Cycle

By quantifying inventory, receivable and payable holding levels, the assessment shows exactly how much cash your operating cycle ties up.
03

Method-Correct Computation

We apply the appropriate method — Tandon MPBF or the Nayak turnover method — so the working-capital gap and margin are computed the way your bank expects.
04

Stronger Loan File

A clear assessment note with projections, ratios and drawing-power workings makes your loan application easier for the bank to appraise.
05

Drawing Power Clarity

Understanding how stock and book-debt margins drive your drawing power helps you use the sanctioned limit without breaching it.
06

Renewal & Enhancement

A well-supported assessment strengthens your case at annual review, whether you are renewing or seeking an enhancement of the limit.

Transparent

Simple, Transparent Pricing

Custom quote for your case

Fees depend on your business type and scope. Get a clear, itemised quote upfront — no hidden professional charges, government fee billed at actuals.

Get a Free Quote WhatsApp

Eligibility

Who Can Apply?

Companies, LLPs & partnership firms

Proprietors & professionals

Traders & distributors with inventory cycles

Manufacturers with production cycles

MSMEs seeking Nayak-method finance

Businesses renewing or enhancing a limit

Eligibility checklist

A running business with an operating cycle to finance
Audited or provisional financial statements available
Projected turnover and financials for the sanction period
Details of current assets — inventory and receivables
Details of current liabilities and trade credit availed
A bank or NBFC to which the assessment will be submitted

End-to-End

Everything You Need. One Professional Team.

01

Consultation

Understand your business, its operating cycle and the limit you are seeking.

02

Financial Review

Review past financials and projections to establish the assessment base.

03

Operating-Cycle Analysis

Compute inventory, receivable and payable holding levels and the operating cycle.

04

Working-Capital Gap

Work out current assets, current liabilities and the resulting working-capital gap.

05

MPBF Computation

Compute Maximum Permissible Bank Finance under the Tandon and/or Nayak method.

06

Ratios & Drawing Power

Compute current ratio and the stock/book-debt drawing power for the limit.

07

Assessment Note

Prepare a bank-ready assessment note with workings, projections and ratios.

08

Application Support

Support you in presenting the assessment to your bank and answering queries.

No Ambiguity

What You’ll Receive

Working-capital gap computation

MPBF workings (Tandon / Nayak method)

Operating-cycle & holding-level analysis

Current-ratio computation

Drawing-power statement (stock & book debts)

Projected turnover & financials summary

Bank-ready assessment note

Guidance on presenting to your lender

Checklist

What Documents Are Required for a Working Capital Assessment?

Requirements are grouped by financials, current assets/liabilities and projections. Keep clear scans (PDF/Excel) ready — everything is collected securely online, and we provide a checklist matched to your assessment method.

Choose a document group

Financial Statements

Past & provisional financials

5 documents

Audited financials for the last 2–3 years
Provisional financials for the current year
Latest trial balance / management accounts
Income-tax returns and computation
GST returns / turnover records

Provisional and projected figures

Banks assess on both past performance and projections. Reliable provisional figures for the current year and realistic projections for the sanction period make the assessment credible.

Stock and debtors statements

Accurate inventory and receivables ageing statements drive both the working-capital gap and the drawing power — outdated or inflated figures weaken the assessment.

Method depends on the limit

The Nayak (turnover) method is generally used for smaller limits (broadly 20% of projected turnover) while larger limits use the Tandon MPBF method. We apply the one your bank expects.

Existing limits matter

If you are enhancing an existing limit, share the current sanction / renewal letter and utilisation so the enhancement is assessed against your present facility.

Don’t have all the documents?

We’ll identify what your case needs →

Step by Step

How the Working Capital Assessment Works (Step by Step)

The entire process is 100% online, with status updates throughout.

01

Consultation

Understand your business, operating cycle and the working-capital limit you are seeking.

02

Documents

Collect financials, projections, stock and debtor statements securely online.

03

Analysis & Computation

Compute the operating cycle, working-capital gap, MPBF, current ratio and drawing power.

04

Draft Assessment

Prepare the assessment note with method, workings and projections for your review.

05

Review & Approve

You review the draft assessment — refinements are made if any.

06

Bank Submission Support

The finalised assessment is delivered and we support you in presenting it to your lender.

How Long It Takes

How Long Does a Working Capital Assessment Take?

Stage	Expected Time
Consultation & document collection	Day 1–3
Analysis & MPBF computation	Day 3–6
Draft review & finalisation	Day 6–8

A typical assessment is prepared within a week once financials and projections are complete. Complex or multi-facility cases may take longer, and bank appraisal and sanction timelines are set by your lender.

Compliance Calendar

Key Dates — At a Glance

Frequency	What Is Due
Monthly	Submit stock and book-debt statements to the bank · Track drawing power against inventory and receivables · Operate within the sanctioned limit
Quarterly	File QIS / quarterly information statements where required · Review projections against actual performance · Monitor the operating cycle for any stretch
Annually	Refresh the assessment for limit renewal · Update financials and projections at review · Assess whether an enhancement is warranted
Event-Based	Reassess if turnover or the operating cycle changes materially · Seek enhancement when the current limit is stretched · Update the assessment for a new lender or facility

Dates are indicative and may change with government notifications. Our team tracks every deadline so you never miss a filing.

Why Outsource

Doing It Yourself vs TaxClue

Doing It Yourself

Decide between the Tandon MPBF and Nayak turnover methods
Compute the operating cycle and holding levels correctly
Work out the working-capital gap and permissible margin
Compute current ratio and stock/book-debt drawing power
Build realistic turnover and financial projections
Prepare an assessment note a bank will accept
Answer the bank's credit-appraisal queries yourself

With TaxClue

Expert selects the correct assessment method for your case
Operating cycle and holding levels computed accurately
Working-capital gap and MPBF computed the bank's way
Current ratio and drawing power worked out clearly
Projections framed to support the limit you seek
A clean, bank-ready assessment note delivered
Support in presenting the assessment to your lender

Skip the guesswork.

Let an expert handle it →

Avoid Delays

Common Mistakes That Delay Your Application

Choosing the wrong method (Tandon vs Nayak) for the limit

Understating the operating cycle and holding levels

Ignoring trade credit when computing the working-capital gap

Over-optimistic turnover projections the bank rejects

Confusing the sanctioned limit with the drawing power

Weak current ratio undermining the finance request

Inconsistent stock and debtor figures across statements

Submitting an assessment note without supporting workings

TaxClue reviews your documents before filing to reduce avoidable errors.

Stay Compliant

What to Keep in Mind After the Assessment

Monthly

Submit stock and book-debt statements to the bank
Track drawing power against inventory and receivables
Operate within the sanctioned limit

Quarterly

File QIS / quarterly information statements where required
Review projections against actual performance
Monitor the operating cycle for any stretch

Annually

Refresh the assessment for limit renewal
Update financials and projections at review
Assess whether an enhancement is warranted

Event-Based

Reassess if turnover or the operating cycle changes materially
Seek enhancement when the current limit is stretched
Update the assessment for a new lender or facility

Risk Assessment

Penalties & Consequences

What is at stake if you do not comply

A poor working-capital cycle strains liquidity and stretches your operating cash
Choosing the wrong method (Tandon vs Nayak) gets the assessment rejected
Over-optimistic turnover projections are rejected by the bank
A weak current ratio undermines the finance request

Latest Updates

Regulatory Updates 2025–26

2025: MSME buyers must pay micro and small suppliers within 45 days, or the expense is disallowed until paid under Section 43B(h) — a key working-capital consideration.
2025: A tax audit under Section 44AB applies above ₹1 crore turnover (₹10 crore if cash receipts and payments are within 5%) and ₹75 lakh for professionals.

The Difference

Why Businesses Choose TaxClue

01

CA / CS Team

Qualified Chartered Accountants and Company Secretaries with credit-appraisal experience prepare your assessment.

02

Method-Correct

We apply the right method — Tandon MPBF or Nayak turnover — the way your bank expects.

03

Fast Turnaround

Committed timelines with proactive status updates. No delays, no excuses.

04

100% Online

Everything over WhatsApp / email — no office visits ever required.

05

Transparent Fees

A clear fee quoted upfront — ₹0 hidden professional charges.

06

Lender Support

We support you in presenting the assessment and answering bank queries.

Data Care

Your Documents Deserve Professional Care

Financials handled by professionals under confidentiality
Access limited to the team working on your assessment
Communication over secure digital channels
Documents retained only as long as needed for the engagement

Answers

Frequently Asked Questions

What is a working capital assessment?

It is an exercise that estimates the short-term funds your business needs to run daily operations — funding inventory, receivables and other current assets net of trade credit — and translates that into the cash-credit or overdraft limit a bank can sanction. It covers the working-capital gap, operating cycle, holding levels, current ratio, drawing power and Maximum Permissible Bank Finance (MPBF).

What is the working-capital gap?

The working-capital gap is total current assets (inventory, receivables and other current assets required for operations) minus current liabilities other than bank borrowing (mainly trade creditors). It represents the funds needed to run the operating cycle that are not already financed by trade credit — the starting point for sizing a bank limit.

What is MPBF and how is it computed?

Maximum Permissible Bank Finance (MPBF) is the working-capital limit a bank can sanction under the Tandon Committee methodology. Broadly, it is the working-capital gap less a stipulated margin the borrower must bring from long-term sources. The method chosen determines how much of the current assets the borrower must fund and how much the bank can finance.

What is the difference between the Tandon and Nayak methods?

The Tandon Committee MPBF method sizes the limit from current assets and a prescribed margin and is generally used for larger limits. The Nayak Committee (turnover) method, used mainly for smaller borrowers, sets working-capital finance at broadly 20% of projected annual turnover, with the borrower expected to bring in a margin of around 5% of turnover. We apply the method your bank expects.

What is the operating cycle and why does it matter?

The operating cycle is the time taken from buying raw material, through production and inventory holding, to selling and collecting from customers — net of the credit you receive from suppliers. A longer operating cycle ties up more cash, so it directly increases the working-capital finance you need.

What is drawing power and how does it differ from the sanctioned limit?

Drawing power is the amount you can actually draw at a given time, computed from the value of stock and book debts after applying the bank's margins. The sanctioned limit is the ceiling the bank approves. Your available finance is the lower of the two, so drawing power can move month to month as inventory and receivables change.

Why does the current ratio matter for the assessment?

The current ratio (current assets to current liabilities) reflects short-term liquidity. Banks look for a healthy ratio — commonly around 1.33:1 under the traditional norm — as it indicates the borrower is bringing an adequate margin from long-term sources rather than relying only on bank finance.

Is a working capital assessment a statutory or legal filing?

No. It is an advisory exercise prepared to support your loan application; there is no government authority to file it with. Banks assess working-capital limits under RBI-guided credit-appraisal norms and the Tandon–Nayak committee framework, applying their own credit policy.

Which documents do you need to prepare the assessment?

Typically audited and provisional financials, income-tax and GST returns, stock and debtor/creditor statements, details of trade credit and existing bank limits, and projected turnover and financials for the sanction period. We provide a checklist matched to your assessment method.

Can this help me get a fresh cash-credit or OD limit?

Yes. The assessment is prepared specifically to support an application for a cash-credit or overdraft limit — it computes the MPBF and drawing power and packages the workings, ratios and projections into a bank-ready note your lender can appraise.

Do you guarantee that the bank will sanction the limit?

No. Sanction is the bank's decision under its own credit policy and appraisal. We prepare a sound, method-correct assessment that strengthens your case and supports your application, but the final limit and terms rest with your lender.

How often should the assessment be refreshed?

Working-capital limits are usually sanctioned for a year and reviewed at renewal, so the assessment is typically refreshed annually with updated financials and projections. It should also be reassessed if your turnover or operating cycle changes materially, or when you seek an enhancement.

What is the working-capital cycle?

The working-capital cycle (or operating cycle) is the time taken from buying raw material, through production and holding inventory, to selling and collecting cash from customers — reduced by the credit period your suppliers give you. The longer the cycle, the more cash is tied up in day-to-day operations and the greater the working-capital finance you need. Shortening it — faster collections, leaner inventory, better supplier terms — releases cash.

How is the Nayak (turnover) method calculated?

Under the Nayak Committee turnover method, used mainly for smaller borrowers, the working-capital requirement is taken as 25% of projected annual turnover; the bank finances 20% of turnover and the borrower brings a margin of 5% of turnover from long-term sources. It is a simplified basis for smaller limits, and we apply it where your bank uses it for your loan size.

What is the minimum current ratio banks expect?

Under the traditional Tandon-based norm banks look for a current ratio of about 1.33:1, meaning current assets are around one-and-a-third times current liabilities. This shows the borrower is funding a reasonable margin from long-term sources rather than relying entirely on bank finance. The exact benchmark varies with the bank's credit policy and the borrower category.

What is the difference between cash credit and an overdraft?

Both are working-capital facilities you can draw and repay flexibly up to a sanctioned limit. A cash-credit (CC) limit is typically secured against and drawn on the security of current assets — stock and book debts — with drawing power revised as those change. An overdraft (OD) is a running account against your bank balance or other security. The assessment sizes the appropriate limit either way.

Can I get a working-capital limit as an MSME with limited financials?

Yes. MSMEs with limited history are commonly assessed under the simpler Nayak turnover method, which sizes the limit from projected turnover rather than detailed MPBF workings. Provisional and projected financials, GST turnover records and stock/debtor statements support the case. We prepare the assessment in the form your lender expects for MSME working-capital finance.

Verify Everything

Official Sources & Legal References

This is an advisory service, not a statutory filing. The methodology follows RBI-guided credit-appraisal norms and the Tandon–Nayak committee framework applied by banks. Useful references:

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