Banks normally sanction working capital credit facilities on annual basis-limits are renewed/enhanced/modified after completion of one year from date of sanction.
Commitment charges on gradation are levied for unutilised portion of the limit to encourage borrowers to use the funds fully and indirectly reminding the borrowers if the limits are underutilised ,they run the risk of reduced working capital limit sanction when annual renewal proposal comeup for review by sanctioning authorities.
For the purpose of levying commitment charges,annual usage of funds under working capital facilities is considered by banks. |
