WHAT IS THE BASIS TO CALCULATE MODIFIED MPBF??

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Ca Aashish Upadhyay (Querist)
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03 November 2010 Dear All

Kindly let me know the method to calculate MPBF under the modified MPBF System.

Happi Deepawali and thanks

Rajan Kapoor

Rajan Kapoor (Expert)
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08 November 2010 MPBF is given below by following two methods.

FIRST Method of Lending
1 Total Current Assets
[ T1 in Form-IV ]

2 Current Liabilities [Other than bank borrowing]
[ T2 in Form-IV ]

3 Working Capital Gap [WCG]
[ 1 - 2 ]

4 Minimum Stipulated Net Working Capital
[ 25% of WCG excluding export receivables]
[ (item 3 above - item no. 6 in Form - IV)*0.25 ]

5 Actual / Projected Net Working Capital [ NWC ]
[ T22 in Form-III ]

6 Item no. 3 minus Item no. 4

7 Item no. 3 minus Item no. 5

8 Maximum permissible bank finance [MPBF]
[ least of item 6 or 7 above ]

9 Excess borrowings representing shortfall in NWC
[ item 4 - item 5 ]

SECOND Method of Lending
1 Total Current Assets
[ T1 in Form-IV ]

2 Current Liabilities [other than bank borrowings]
[ T2 in Form-IV ]

3 Working Capital Gap (WCG) (1-2)
[ 1 - 2 ]
4 Minimum Stipulated Net Working Capital
[25% of total Current Assets excluding export receivables]
[ (1 above - item 6 in Form-IV)*0.25 ]

5 Actual / Projected net working capital
[ T22 in Form-III ]

6 Item no. 3 minus Item no. 4

7 Item no. 3 minus Item no. 5

8 Maximum permissible bank finance [MPBF]
[ least of item 6 or 7 above ]

9 Excess borrowings representing shortfall in NWC
[ item 4 - item 5 ]

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