The following committees were especially appointed for the purpose to administer the working capital.

  1. Dheja Committee Report 1969
  2. Tandon Committee Report 1975
  3. Chore Committee Report 1980
  4. Marathe Committee Report 1984

The various committee report implications are the following:

Dheja Committee Report 1969

"The study carried out on the credit need of the industry and trade and how that needs inflated and such trends were checked" by the under the chairmanship of Dheja Committee.


  1. General tendency was found among the firms to avail the bank credit more than their requirements.
  2. Another tendency was among them that the short term credit was generally made use of by thee for the acquisition of the long term assets
  3. The lending through cash credit should be done on the basis of security in order to assess the financial position of the firm


  1. Appraisal should be done by the bankers on the present and future performance of the firms
  2. The total dealings are segmented into two categories viz core and short-term needs
  3. The committee suggested the firms to maintain only one account with the one banker For huge amount of borrowing, consortium was suggested among the bankers to lend the corporate borrowers

Tandon Committee

The next committee was appointed Tandon Committee 1975, in an intention of granting loans and advances to the industry on the need basis through the study of the development proceeds only in order to improve the weaker section of the people.

Findings of the Committee

  1. The bank should not reveal this much only to lent to the requirements of the firm in accordance with lending policy, in spite of that the banks were expected to lend to the tune of firm's requirement.
  2. It should be treated as supplementary source of finance but not as major source of finance
  3. Loans were lent only in accordance on the basis of the securities produced by the borrower but not on basis of level of operations
  4. Security compliance wont provide any safety to the banks but the periodical follow up only should facilitate the banker to get back the amount of loans and advances lent

Recommendations: It reached the land mark in studying the need of the industries towards the requirements of the working capital. The committee has submitted its report on 9th Aug, 1975 by studying the lending policies.

  1. Necessary information about the future operations are to be supplied
  2. The supporting current assets should be shown to the banker at the moment of borrowing
  3. The bank should understand that the bank credit is only for the purposes to meet out the needs of the borrower but not for any other.

Chore Committee Report 1979

This committee especially constituted only for the purpose to study the sanctionable limits of the banker and the extent of the loan amount utilization of the borrower. The another purpose of the committee to appoint that to provide the alternate ways and means to afford credit facility to the industries to enhance the productive activities in the country.

  1. Continuance of the existing three system of credits by the banker viz cash credit, loans and bills
  2. No need to bifurcate the cash credit accounts of the borrower for the implementation of the differential rate of interest
  3. According to the specifications of the borrower, the banker should come to one conclusion which in normal peak level and non peak level of operations only to the tune of operations
  4. No frequent sanction of ad hoc limits of borrowing from the banker
  5. The overdependence on the bank credit should be lessened among the practices of the industrialists through emphasizing the need of term finance.

Marathe Committee Report 1984

The fourth committee is Marathe committee which was instituted by the Reserve bank of India and it submitted the report on 1983. The recommendations were implemented by the Government of India from April 1,1984.


  1. Reasonability of the projection statements are to be studied by the banks more carefully
  2. Current assets and liabilities are to be classified in accordance with the norms issued by the Reserve bank of India
  3. Maintenance of the current assets ratio 1.33:1
  4. Timely supply the information stipulated by the bankers
  5. Apt supply of annual accounting information


ABC Ltd. decides to liberalise credit to increase its sales. The liberalized credit policy will bring additional sales of Rs. 3,00,000. The variable costs will be 60% of sales and there will be 10% risk for non-payment and 5% collection cost .Will the company benefit from the new credit policy ?


The new credit policy pave way for the firm to earn Rs.75,000 as an additional revenue through the volume of incremental sales.

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