Scribd Logo
Upload

Welcome to Scribd!

  • 236 views

    Chore Committee

    Uploaded by

    dharshini
    The Chore Committee was formed in 1979 to review India's cash credit system and suggest modifications to promote greater credit discipline. Some major recommendations included: 1) Borrowers should contribute more of their own funds to finance working capital requirements instead of relying solely on bank credit. 2) Credit limits should be separated into "peak" and "normal" levels for borrowers with credit limits over 10 lacs, and any utilization over 10% of the peak level without prior notice would be considered an irregularity subject to a 1% additional interest charge. 3) The existing lending systems of cash credit, working capital term loans, and bill discounting should continue, but cash credit accounts for large borrowers should

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd

    Chore Committee

    Uploaded by

    dharshini
    236 views3 pages
    The Chore Committee was formed in 1979 to review India's cash credit system and suggest modifications to promote greater credit discipline. Some major recommendations included: 1) Borrowers should contribute more of their own funds to finance working capital requirements instead of relying solely on bank credit. 2) Credit limits should be separated into "peak" and "normal" levels for borrowers with credit limits over 10 lacs, and any utilization over 10% of the peak level without prior notice would be considered an irregularity subject to a 1% additional interest charge. 3) The existing lending systems of cash credit, working capital term loans, and bill discounting should continue, but cash credit accounts for large borrowers should

    Original Description:

    Chore committee in financial management

    Copyright

    © © All Rights Reserved

    Available Formats

    PDF, TXT or read online from Scribd

    Did you find this document useful?

    Is this content inappropriate?

    The Chore Committee was formed in 1979 to review India's cash credit system and suggest modifications to promote greater credit discipline. Some major recommendations included: 1) Borrowers should contribute more of their own funds to finance working capital requirements instead of relying solely on bank credit. 2) Credit limits should be separated into "peak" and "normal" levels for borrowers with credit limits over 10 lacs, and any utilization over 10% of the peak level without prior notice would be considered an irregularity subject to a 1% additional interest charge. 3) The existing lending systems of cash credit, working capital term loans, and bill discounting should continue, but cash credit accounts for large borrowers should

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    236 views3 pages

    Chore Committee

    Uploaded by

    dharshini
    The Chore Committee was formed in 1979 to review India's cash credit system and suggest modifications to promote greater credit discipline. Some major recommendations included: 1) Borrowers should contribute more of their own funds to finance working capital requirements instead of relying solely on bank credit. 2) Credit limits should be separated into "peak" and "normal" levels for borrowers with credit limits over 10 lacs, and any utilization over 10% of the peak level without prior notice would be considered an irregularity subject to a 1% additional interest charge. 3) The existing lending systems of cash credit, working capital term loans, and bill discounting should continue, but cash credit accounts for large borrowers should

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    of 3

    CHORE COMMITTEE

    • In April 1979, the Reserve Bank of India constituted a working group to review
    the system of cash credit under the chairmanship of Mr K.B. Chore . The main
    terms of reference for the group were to review the cash credit system and
    suggest modifications and /or alternate types of credit facilities to promote
    greater credit discipline and relate credit limits to production . The major
    recommendations having a bearing on bank credit to firms of the Group are as
    follows.
    CHORE COMMITTE RECOMENDATION
    1. Reduced dependence on Bank credit :
    The borrowers should contribute more funds to finance their working
    capital requirements. The idea was to place all borrowers in the 2 method suggested
    by the Tandon Committee. In case of difficulties the resort could be taken to WCTL.
    2. Credit limits to be separated in to “Peak level” and “Non Peak level”
    limits:
    Credit limit should be assesed and separated in to “Peak level” and “ Normal
    level” for borrowers with credit limits more than 10 lacs. Borrowers should, in
    advance , inform the requirement of peak level limits. Moreover, any deviation in
    Utilization beyond 10% tolerance, should be treated as an irregularity. Additional
    interest of 1% should be chargedon ad hoc borrowings .
    3. Existing lending system to continue : The Existing system had three types of
    lending :
    a) Cash credit
    b) WCTL
    c ) Bill discounting
    Cash credit system should be replaced by the other two wherever possible. Cash credit
    accounts of large borrowers to be Scruitinized, at least once a year
    4. Information System : The Discipline regarding submission of quarterly
    statements should be strictly adhered to , in respect of all borrowers having limits of 50
    lacs and above.

    You might also like