How banks assess your working capital limit
The Nayak method for smaller limits, MPBF for larger ones — and how to present projections credibly.
6 min read
What you need to know
For limits up to ₹5 crore, banks generally apply the Nayak Committee (turnover) method: working capital requirement is taken at 25% of projected annual turnover, the bank funds 20% and you bring 5% as margin.
Above that threshold, the Maximum Permissible Bank Finance method applies, working from current assets less current liabilities. Either way, the projection you submit must be defensible — a turnover jump that your order book and capacity cannot support will simply be scaled back by the appraising officer.
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Use this guide alongside our product details and eligibility criteria before choosing a lender.
Frequently asked questions
What is the main takeaway from “How banks assess your working capital limit”?
The Nayak method for smaller limits, MPBF for larger ones — and how to present projections credibly.
What should I check before acting on this business finance guide?
Review the practical points in the guide against your income, obligations, documents and lender requirements.
Can the information in this guide guarantee loan approval?
No. It is general educational information. A bank or NBFC makes the final decision after checking your credit profile, repayment capacity, documents and the applicable product policy.
How can iFINTRUST help after I read this guide?
An iFINTRUST advisor can review your requirement, explain the documents normally requested and help you compare suitable lending options before you apply.