Most borrowers see their working-capital limit as a negotiation. Inside the bank, it is arithmetic. Understanding that arithmetic is the fastest way to a better limit.
For limits up to ₹5 crore, most banks apply the turnover method: 25% of projected turnover as working capital requirement, of which the bank funds 20% and you bring 5% as margin. Your projected turnover must be defensible from GST returns and past trends.
For larger limits, the Maximum Permissible Bank Finance (MPBF) method takes over: the bank funds the working-capital gap after your margin, driven by holding norms for inventory, debtors and creditors. Inflated debtors or slow-moving stock reduce eligibility directly.
The lesson: the limit you get is decided by the quality of your CMA data long before it reaches a sanctioning authority. Prepare it like the bank will read it — because they will.