JAIIB · PPB

OPERATIONAL ASPECTS OF LOAN ACCOUNTS

Chapter notes, video classes, MCQ practice tests and quick-revision one-liners for Principles and Practices of Banking — JAIIB.

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One-liners from this chapter

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What is the purpose of a loan account ledger maintained by a bank?

A loan account ledger records all debits (disbursements, interest, charges) and credits (repayments) to track the outstanding balance and repayment history of a borrower.

What is a 'book debt' in the context of working capital financing?

Receivables owed to borrower by customers for goods sold.

What does 'drawing power' mean in the context of a cash credit account?

Drawing power is the maximum amount a borrower can withdraw from a cash credit account at any point, calculated based on the value of stocks and debtors less prescribed margin.

What is meant by 'drawing power' linked to debtors in a cash credit limit?

Eligible limit based on approved percentage of outstanding debtors.

How is interest charged in an overdraft account?

Interest in an overdraft account is charged on the actual amount utilised (debit balance) on a daily product basis, typically debited at the end of each quarter or month.

What is the meaning of 'consortium lending' in banking?

Multiple banks jointly financing a single borrower under one arrangement.

What is a term loan and how does repayment work?

A term loan is a loan disbursed for a fixed period repayable in instalments (EMIs or bullet), with interest charged on the outstanding principal balance.

What is a 'lead bank' in a consortium lending arrangement?

Bank that coordinates documentation, disbursement, and monitoring for the consortium.

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