Current Ratio 1.33 & Method II — What Banks Check
Plain explanation of the 1.33 current-ratio thumb rule next to MPBF Method II in CMA working-capital assessment.
Many Indian bank CMA packs reference Method II working-capital assessment and a current-ratio comfort band near 1.33. Treat this as appraisal practice, not a guarantee of sanction.
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How it relates to MPBF
MPBF Method II estimates maximum permissible bank finance from operating cycle and margins. Current ratio shows whether current assets adequately cover current liabilities after the proposed finance pattern.
Headroom vs shortfall
- Proposed WC below MPBF → headroom (ask within assessed finance)
- Proposed WC above MPBF → shortfall (strengthen margins or reduce ask)
FAQ
Is 1.33 a legal rule?
It is a common bank appraisal convention under Method II style assessment—not a statute. Policies vary by lender.
If proposed WC is below MPBF, is that good?
Usually yes on paper: the ask sits within assessed bank finance. Confirm with your branch’s norms.
Credlook.in provides project report and CMA documentation software from customer-provided details. We are not a bank, NBFC, lender, or government scheme authority.