C CREDIT DELIVERY
Chapter notes, video classes, MCQ practice tests and quick-revision one-liners for Advanced Bank Management — CAIIB.
One-liners from this chapter
Free sample — 8 of 66 rapid-fire Q&A cards.
What is the primary objective of credit delivery in Indian banking?
The primary objective of credit delivery is to channelize funds to productive sectors of the economy while ensuring repayment and maintaining asset quality.
What is the Maximum Permissible Bank Finance (MPBF) method used for?
To determine the maximum working capital credit a bank can extend.
What is a Working Capital Demand Loan (WCDL)?
A WCDL is a short-term loan carved out from the Cash Credit limit, usually at a fixed rate of interest, repayable within a stipulated period not exceeding one year.
What is the second method of lending recommended by the Tandon Committee?
Borrower finances 25% of total current assets from own funds.
What does the Tandon Committee recommend regarding credit delivery to industry?
The Tandon Committee recommended the Maximum Permissible Bank Finance (MPBF) method, under which banks finance only a portion of the working capital gap after the borrower contributes a minimum margin from long-term sources.
What is the third method of lending recommended by the Tandon Committee?
Borrower finances core current assets from long-term funds.
What is the Cash Credit system of credit delivery?
Cash Credit is a running account facility where the borrower can draw funds up to the sanctioned limit and repay as per cash flows, with interest charged only on the outstanding balance.
What is the concept of Clean Credit in trade finance?
Credit extended without security of underlying trade documents.
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