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 ?
Both Statement-I and Statement-II are correct and Statement-II explains Statement-I
Both Statement-I and Statement-II are correct, but Statement-II does not explain Statement-I
Statement-I is correct, but Statement-II is incorrect
Statement-I is incorrect, but Statement-II is correct
Answer is Right!
Answer is Wrong!
This question was previously asked in
UPSC IAS – 2024
Statement-II is incorrect. Syndicated loans can be structured in various forms. While term loans (fixed amount/lump sum) are common, syndicated facilities can also be structured as revolving credit facilities, which function like a credit line allowing the borrower to draw, repay, and redraw funds up to a specified limit over a period. Therefore, a syndicated loan *can* be a credit line.