Chapter

New Era of Lending

Hrishikes Bhattacharya

in Banking Strategy, Credit Appraisal, and Lending Decisions

Second edition

Published in print October 2011 | ISBN: 9780198074106
Published online September 2012 | e-ISBN: 9780199080861 | DOI: http://dx.doi.org/10.1093/acprof:oso/9780198074106.003.0012
New Era of Lending

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This chapter focuses on the lending system proposed by the Tandon Committee in 1975, which was later perfected by the Chore Group The greatest strength of this system lay in its simplicity and flexibility to adapt to changes in the economic environment without tilting its basic framework. By highlighting the necessity of developing industry-wise norms for holding inventories and receivables, the committee laid down the foundation of a lending discipline hitherto unheard of in the history of Indian banking. Later the Chore Group took pains in raising various issues around the prevalent cash credit system of financing working capital. It looked beyond, but stopped short of recommending gradual replacement of the cash credit system by the loan system.

Keywords: Tandon committee; lending system; norms; current ratio; Chore Group; cash credit system; liquidity; loan system; bill system; bill discounting system; appraisal formats; lending decisions

Chapter.  23210 words. 

Subjects: Financial Markets

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