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CMA data & MPBF calculator 2026

The working-capital assessment behind a bank loan proposal for FY 2026-27, worked the way the banker will work it and checked against RBI guidance as of October 2026. Enter projected current assets, current liabilities other than bank borrowings, turnover and the promoter’s margin — get the working capital gap, the permissible bank finance under the Tandon first and second methods and the Nayak turnover method, the current ratio, and what goes in each CMA form.

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The projected year

Borrower

Total current assets (₹ lakh)

Inventory, receivables, cash and bank, advances and other current assets as projected in CMA Form IV.

Of which, export receivables (₹ lakh)

Excluded from the base on which the borrower’s 25% contribution is worked, under both methods. Leave at 0 if there are none.

Current liabilities other than bank borrowings (₹ lakh)

Sundry creditors, advances from customers, statutory dues, provisions, and term-loan instalments due within a year. Exclude the cash credit / working-capital loan itself.

Projected annual turnover (₹ lakh)

Gross sales for the year the limit is being assessed for — the figure the bank accepts, not necessarily the one projected.

Promoter margin — actual / projected net working capital (₹ lakh)

Long-term funds left over for working capital: net worth plus term liabilities, less fixed and non-current assets. Can be negative if long-term funds have been diverted.

Working capital gap

₹300 L

Current assets less other current liabilities

MPBF — second method

₹200 L

The method most banks apply

Projected current ratio

1.29 : 1

Below the 1.33 the second method implies

Permissible bank finance, three ways

Tandon — first method

Borrower brings 25% of the working capital gap

Working capital gap₹300 L

Minimum NWC (25% of gap)₹75 L

Gap less minimum NWC₹225 L

Gap less actual NWC₹210 L

MPBF — lower of the two

₹210 L

Current ratio at this limit: 1.29 : 1

Tandon — second method

Borrower brings 25% of total current assets

Working capital gap₹300 L

Minimum NWC (25% of current assets)₹100 L

Gap less minimum NWC₹200 L

Gap less actual NWC₹210 L

MPBF — lower of the two

₹200 L

Shortfall in NWC: ₹10 L to be brought in.

Nayak — turnover method

A quarter of turnover, shared 5 : 20

Projected turnover₹1,200 L

Requirement (25%)₹300 L

Borrower margin (5%)₹60 L

Actual NWC available₹90 L

Bank finance — 20% of turnover

₹240 L

NWC exceeds the 5% margin. Many banks then reckon the higher NWC and reduce the limit.

Which figure the bank will use

RBI stopped prescribing MPBF in April 1997, so the method is a matter of each bank’s loan policy. The surviving RBI instruction is the turnover floor for micro and small enterprises — limits of up to ₹5 crore assessed at a minimum of 20% of projected annual turnover. Above that, most banks still work the second method and look for a current ratio of 1.33; seasonal and contract businesses are usually assessed on a cash budget instead. Where the turnover method and the traditional method give different answers for a small unit, the higher need can be sanctioned — the 20% is a floor, not a cap.

What goes in each CMA form

Form I

Particulars of existing and proposed limits

Every fund-based and non-fund-based facility the borrower enjoys from the banking system — limit, outstanding, and the limits now asked for. The banker reads the request against this.

Form II

Operating statement

Sales, cost of production, cost of sales, operating profit, other income, tax and net profit — for the last two audited years, the current-year estimate and the projection years. The projected turnover used in the turnover method comes from here.

Form III

Analysis of balance sheet

The balance sheet reclassified on the banker’s lines: current liabilities (bank borrowings shown separately), term liabilities, net worth, current assets, fixed assets and non-current assets — with tangible net worth, net working capital and the current ratio drawn from it.

Form IV

Comparative statement of current assets and current liabilities

Each component of working capital — raw material, work-in-progress, finished goods, receivables, other current assets, creditors, other current liabilities — with holding periods in months, year on year.

Form V

Computation of maximum permissible bank finance

Total current assets, current liabilities other than bank borrowings, the working capital gap, the minimum net working capital the borrower must bring, the actual or projected net working capital, and the MPBF as the lower of the two results. The calculation on this page.

Form VI

Funds flow statement

Sources and uses of long-term and short-term funds for each year — the check that long-term sources cover long-term uses and that working-capital funds are not being diverted into fixed assets.

Banks usually ask for two audited years, the current-year estimate and the projection years side by side. Some formats add a seventh sheet of ratios; the six above are the core set.

Limit sanctioned? The monthly drawing against it is a separate sum — see the drawing power calculator. For the term-loan side of the same proposal, use the DSCR calculator.

How a bank assesses a working-capital limit in 2026

CMA data — Credit Monitoring Arrangement data — is the set of statements a borrower files with a working-capital proposal: existing and proposed limits, an operating statement, a reclassified balance sheet, a build-up of current assets and current liabilities, the computation of permissible bank finance, and a funds flow. The fifth form is where the limit is derived. It starts from total current assets, deducts current liabilities other than bank borrowings to arrive at the working capital gap, and then asks how much of that gap the borrower must fund from long-term sources — its net working capital, which is the promoter’s margin in the business.

The Tandon Committee gave two answers that banks still use. Under the first method the borrower brings 25% of the working capital gap and the bank finances the remaining 75%. Under the second method the borrower brings 25% of total current assets, a larger contribution, and the bank finances the rest of the gap; this always produces a current ratio of 1.33 : 1, which is where that familiar benchmark comes from. In both, export receivables are left out of the base on which the 25% is worked, and the form compares the minimum stipulated margin with the actual or projected net working capital: the permissible finance is the lower of the gap less the stipulated margin and the gap less the actual margin. If the actual margin is short, the difference is the amount the promoter must bring in or the bank must carry as excess borrowing to be regularised.

For small borrowers the Nayak Committee replaced this arithmetic with a rule of thumb. Working capital need is taken as 25% of projected annual turnover — an assumed three-month operating cycle — of which the borrower funds 5% and the bank at least 20%. RBI’s Master Direction on lending to the MSME sector carries the instruction that working capital limits of micro and small enterprises be computed at a minimum of 20% of projected annual turnover for limits up to ₹5 crore; banks commonly apply the same method to other borrowers up to ₹2 crore under their own policies. None of the Tandon arithmetic is mandatory today: RBI withdrew the MPBF prescription in April 1997 and left banks free to use the turnover method, a cash budget, the MPBF system or their own. The methods survive because they are a shared language between borrower, banker and the CA who prepares the file.

Worked example — a small manufacturer asking for cash credit for FY 2026-27

A small enterprise projects turnover of ₹12 crore for the coming year. Projected current assets are ₹400 lakh, current liabilities other than bank borrowings ₹100 lakh, and long-term funds available for working capital (net working capital) ₹90 lakh. There are no export receivables.

Inputs

Total current assets₹400 L

Current liabilities other than bank borrowings₹100 L

Projected turnover₹1,200 L

Actual / projected NWC₹90 L

Output

Working capital gap₹400 L − ₹100 L = ₹300 L

First methodMin NWC ₹75 L → lower of ₹225 L and ₹210 L = ₹210 L

Second methodMin NWC ₹100 L → lower of ₹200 L and ₹210 L = ₹200 L

NWC shortfall under second method₹10 L

Turnover method20% of ₹1,200 L = ₹240 L (margin needed ₹60 L)

Projected current ratio400 ÷ (100 + 210) = 1.29 : 1

The three methods give ₹210 lakh, ₹200 lakh and ₹240 lakh. Because this is a small enterprise asking for less than ₹5 crore, the turnover floor applies and ₹240 lakh is supportable — but only if the build-up of current assets in Form IV actually needs it; a bank will not fund a limit the projected stock and debtors cannot absorb. On the second method the promoter is ₹10 lakh short of the stipulated margin, which is why the projected current ratio sits at 1.29 rather than 1.33. Expect the sanction to carry a condition to bring that in.

Common mistakes

Leaving bank borrowings inside current liabilities

The working capital gap is current assets less current liabilities other than bank borrowings. Deducting the existing cash credit as well understates the gap and the limit. Term-loan instalments falling due within twelve months, on the other hand, do belong in other current liabilities.

Taking 75% of the gap and stopping there

Form V takes the lower of two figures: the gap less the stipulated minimum margin, and the gap less the actual or projected net working capital. A borrower with more long-term funds than the minimum gets a smaller MPBF, not a larger one — the bank finances only what the borrower’s own funds do not already cover.

Projecting turnover the past does not support

The turnover method multiplies whatever turnover the bank accepts. A projection far above the last audited year, GST returns and the current-year run rate will be cut back, and the limit with it. State the basis — orders in hand, capacity added, new customers — in the note to Form II.

Treating the turnover method as a ceiling

For micro and small enterprises the 20% is a minimum. Where the operating cycle is longer than three months and the traditional assessment shows a higher need, the higher limit can be sanctioned. Equally, a unit with a short cycle may not need the full 20%.

Classifying to flatter the current ratio

Showing instalments due within a year as term liabilities, or long-outstanding debtors and slow-moving stock as good current assets, improves the ratio on paper. Bankers reclassify in Form III, and the figures must reconcile to the audited balance sheet. A CMA that does not tie to the signed accounts damages the proposal and the preparer.

Mixing the sanction with the drawing

MPBF fixes the limit for the year. What can be drawn in any month is the drawing power computed from the stock and book-debt statement after margins. The two are different calculations on different dates.

Frequently asked questions

What is CMA data for a bank loan?+

Credit Monitoring Arrangement data is the standard set of financial statements a borrower submits to a bank for a working-capital or term-loan proposal. It has six core forms: particulars of existing and proposed limits, operating statement, analysis of balance sheet, comparative statement of current assets and current liabilities, computation of maximum permissible bank finance, and funds flow statement — usually covering two audited years, the current-year estimate and the projected years.

How is MPBF calculated for a bank loan?+

MPBF is the working capital gap less the margin the borrower must bring. Start with the working capital gap: total current assets less current liabilities other than bank borrowings. Under the Tandon first method the borrower must fund 25% of that gap, so MPBF is 75% of the gap. Under the second method the borrower must fund 25% of total current assets, so MPBF is the gap less 25% of current assets. In each case, if the borrower’s actual net working capital is higher than the stipulated minimum, MPBF is the gap less the actual net working capital.

What is the difference between the first and second methods of lending?+

The base for the borrower’s 25% contribution. The first method applies it to the working capital gap; the second applies it to total current assets, which is a bigger number, so the borrower brings more and the bank lends less. The second method always yields a current ratio of 1.33 : 1; under the first method the ratio depends on how much of current assets is funded by creditors and falls between 1 and 1.33.

What is the turnover method for working capital assessment?+

It is a simplified assessment recommended by the Nayak Committee. Working capital need is taken as 25% of projected annual turnover; the borrower contributes 5% of turnover as margin and the bank finances a minimum of 20%. It assumes an operating cycle of about three months.

Up to what limit does the turnover method apply in 2026?+

Up to ₹5 crore of working capital limits for micro and small enterprises. RBI’s instructions on lending to the MSME sector provide for working capital limits of micro and small enterprises to be computed at a minimum of 20% of projected annual turnover for limits up to ₹5 crore. For other borrowers, banks commonly use the method up to ₹2 crore under their own loan policies. Individual banks may set different internal cut-offs, so check the lending bank’s policy.

Is MPBF still mandatory in 2026?+

No. RBI withdrew the prescription in April 1997. Banks may assess working capital by the turnover method, a cash budget, the MPBF system or any method in their board-approved loan policy. In practice most still compute MPBF on the second method for limits above the turnover-method range.

What current ratio do banks expect for a working capital loan?+

The usual benchmark is 1.33 : 1, which is simply the arithmetic result of the second method. Lower ratios are accepted for smaller units, depending on the bank’s policy, the industry and the trend. It is a matter of lending practice, not a regulatory minimum.

Why are export receivables excluded in MPBF calculation?+

To avoid penalising exporters. In Form V the borrower’s 25% contribution is worked on the gap or on current assets after leaving out export receivables, so no margin is demanded on them and the permissible finance is correspondingly higher.

Can a CA prepare and certify CMA data?+

Yes, with care about what is being certified. A CA commonly prepares or compiles CMA data. The historical columns must agree with the audited accounts; the projections are the management’s, and any report on them should follow the ICAI standard on examination of prospective financial information and say plainly that they are based on the management’s assumptions. A UDIN is required for any certificate or report issued.

Authoritative sources

RBI

Master Direction — Lending to Micro, Small & Medium Enterprises (MSME) Sector — Carries the Nayak Committee instruction: working capital limits of micro and small enterprises computed at a minimum of 20% of projected annual turnover, for limits up to ₹5 crore. Updated periodically — read the current version.

RBI

Frequently Asked Questions — Micro, Small and Medium Enterprises — Restates that, per the Nayak Committee report, working capital limits are computed on the basis of a minimum of 20% of estimated turnover up to a credit limit of ₹5 crore.

Always confirm against the latest version of the source. Regulations evolve and amendments are common.

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CMA data format (Word) →DSCR calculator →Drawing power calculator →Schedule III ratio calculator →MSME / Udyam classification calculator →Net worth calculator →Cash flow statement builder →

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Last reviewed: 2026-10-01 · For informational purposes only — not professional advice.