MPBF Calculator
Compute Maximum Permissible Bank Finance using Tandon Method I, Method II or Nayak Committee turnover method.
MPBF Assessment Wizard
Step 1 of 3RBI Deregulation Note
While RBI deregulated MPBF in 1997, most Indian banks continue to use Tandon Method II as the benchmark for working capital sanction appraisals and CMA data preparation.
Nayak Committee Scope
FAQs on MPBF & Working Capital
What is MPBF?
MPBF (Maximum Permissible Bank Finance) is the maximum working capital the bank can lend as per Tandon Committee guidelines — equal to 75% of Net Working Capital (Method I) or 75% of CA minus CL (Method II).
Difference between Tandon Method I and II?
Method I: MPBF = 75% × NWC (borrower contributes 25% of NWC). Method II: MPBF = 75% × CA − CL (borrower contributes 25% of CA). Method II is more conservative and results in a lower bank exposure.
When does the Nayak Committee method apply?
The Nayak (Turnover) method applies to borrowers with aggregate WC requirements up to ₹5 crore. MPBF = 20% of projected annual turnover. Minimum NWC contribution by borrower = 5% of turnover.
Is MPBF still relevant after RBI deregulation in 1997?
Yes. While RBI deregulated MPBF as a mandatory requirement, it remains the standard benchmark used by public sector banks in CMA data preparation, sanction note justification, and working capital appraisal.
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