UPSC CSE Prelims
Question 93
Consider the following statements :
Statement-I : Syndicated lending spreads the risk of borrower default across multiple lenders.
Statement-II : The syndicated loan can be a fixed amount/lump sum of funds, but cannot be a credit line.
Which one of the following is correct in respect of the above statements ?
View correct answer and explanation
Correct answer: C
Correct Option: C (Statement-I is correct, but Statement-II is incorrect)
Explanation: Syndicated loans spread credit exposure across multiple lenders and may take the form of either term loans or revolving/credit-line facilities.
Statement / Pair / Item-wise Analysis:
I. Correct/True - Multiple banks/lenders share the funding and default risk.
II. Incorrect/False - A syndicated facility can be a revolving credit line, not only a fixed lump-sum term loan.
Option-wise Analysis:
A. Incorrect-Statement II is false: A syndicated facility can be a revolving credit line, not only a fixed lump-sum term loan.
B. Incorrect-Statement II is false: A syndicated facility can be a revolving credit line, not only a fixed lump-sum term loan.
C. Correct-only Statement I is true.
D. Incorrect-Statement I is true, not false: Multiple banks/lenders share the funding and default risk.