
The threshold for early warning signal (EWS) and red-flagged account (RF-A) is an exposure of _____, at the level of a bank irrespective of
the lending arrangement:

Important Questions on Loan Policy and Loan Documentation



What is the networking capital (margin) requirement under the second method of lending of Tandon Committee:
a. 25% of total current assets
b. 25% of total assets
c. 25% of the working capital gap
d. None of the above

The renewal of cash credit limits for working capital is stipulated by RBI on:
a. Half-yearly basis
b. Quarterly basis
c. Annual basis
d. Bi-annual


Current assets of a company are Rs.800 lac and other current liabilities are Rs.80 lac. What shall be the amount of Permissible Bank Finance, as per the second method of lending as suggested by the Tandon Committee?
a. Rs.720 lac
b. Rs.640 lac
c. Rs.520 lac
d. Rs.440 lac

Internal rate of return in the context of project financing indicates:
a. The profit made by the unit
b. Benchmark prices for material transfer
c. The rate of discount at which the net present value of cash flows from the project is zero
d. Rate of rejection of project
e. a and c
