Vinu: Manu, working capital assessment looks simple on paper, but branches struggle in practice. Why?

Manu: Because theory assumes clean data, while branches deal with incomplete records, tax-optimized financials, and cash-based operations.

Vinu: From the start, what is the biggest challenge?

Manu: Assessing the real operating cycle. Inventory and receivable figures in books often don’t reflect ground reality.

Vinu: How does this affect limit assessment?

Manu: Inflated debtors or stock lead to higher eligible limits, increasing risk. Understated payables distort the working capital gap.

Vinu: Borrowers often push for higher limits citing growth. How should bankers respond?

Manu: Growth must be validated with sales trends, GST data, and bank turnover—not projections alone.

Vinu: What about margin norms?

Manu:  Margin is frequently under pressure. Many MSMEs depend heavily on bank funding, leaving little buffer for cash shocks.

Vinu: How do cash sales complicate assessment?

Manu: Cash sales reduce visibility. When ₹30 lakh sales don’t reflect in bank accounts, assessing true turnover becomes difficult.

Vinu: Are drawing power calculations reliable?

Manu: Only if stock statements are reliable. Otherwise, drawing power becomes a mechanical exercise with hidden risk.

Vinu: What role does monitoring play post-sanction?

Manu: A critical one. Delayed statements, persistent overdrawings, and frequent ad-hoc requests signal stress early.

Vinu: Any practical advice for branch bankers?

Manu: Be conservative, verify data, and align limits with cash flow, not optimism.

Vinu: Final takeaway?

Manu: Working capital lending is dynamic. What is not monitored today becomes a problem tomorrow.

Vinu: That reflects the ground reality well.

Manu: Every branch banker learns this the hard way.

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