Page 240 - DCOM505_WORKING_CAPITAL_MANAGEMENT

Unit 14: Working Capital Management Practices in India

14.9 Keywords Notes

Bills Financing: This facility enables a borrower to obtain credit from a bank against its bills.
Cash Credit: Under this facility, the bank specifies a predetermined limit and the borrower is
allowed to withdraw funds from the bank up to that sanctioned credit limit against a bond or
other security.
Commercial bank: A commercial bank is a business organization which deals in money i.e.
lending and borrowing of money.
Letter of credit: A letter of credit is the guarantee provided by the buyer’s banker to the seller
that in the case of default or failure of the buyer, the bank shall make the payment to the seller.

14.10 Review Questions

1. What are the regulations of bank credit?
2. Write down the recent RBI guidelines regarding working capital finance.
3. Briefly explain the working capital management in domestic and multinational enterprises.

4. Write short note on working capital management under inflation and working capital
and small scale industries.

Answers: Self Assessment

1. commercial paper 2. credit limit

3. hypothecation 4. pledge
5. true 6. true
7. true 8. true
9. true 10. False

14.11 Further Readings

Books Bhalla, V. K., (2003), Working Capital Management, New Delhi, Anmol
Publications Private Limited, 5th Edition.
Chandra, Prasanna, (2001), Financial Management: Theory and Practices, New
Delhi, Tata McGraw Hill Publishing Company Limited, 5th Edition,.
Khan, M. Y. and Jain, P. K., (2004), Financial Management: Text and Problems,
New Delhi, Tata McGraw Hill Publishing Company Limited, 4th Edition.
Maheshwari, S. N., (2004), Financial Management: Principles and Practices, New
Delhi, Sultan Chand & Sons Educational Publishers, 9th Edition.

Pandey, I. M., (2001), Financial Management, New Delhi, Vikas Publishing House
Private Limited, 8th Edition.
Srinivasa, S., (1999), Cash and Working Capital Management, New Delhi, Vikas
Publishing House Private Limited.

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