What is the Tandon Committee?
By BYJU'S Exam Prep
Updated on: November 9th, 2023
The Tandon Committee was established with the goal of developing proper guidelines for commercial banks in terms of follow-up, supervision, and proper final use of bank credit. The Reserve Bank of India established this committee in July 1974, chaired by Shri PL Tandon. In August 1975, the committee issued its report, which became known as the Tandon Committee Report on Working Capital.
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Tandon Committee
Under the chairmanship of Mr. P.L Tandon, the Tandon Committee was formed in the form of a study group that was responsible for the formation of certain guidelines regarding the supervision and follow-up of bank credit to ensure proper and correct utilization of bank funds.
In August 1975, the Tandon Committee Report on Working Capital was submitted by this study group. The committee basically made some recommendations that resulted in a significant shift in the bank’s lending system from security-based lending to need-based lending.
- For fifteen different industries, the Tandon Committee had initially proposed standards for holding different current assets.
- The least of these standards were expanded to almost all major industries across the nation, and many of these standards were revised.
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