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      Question

      Which of the following is an example of an 'Off-Balance

      Sheet' exposure? 
      A A disbursed loan of ₹500 Crore. Correct Answer Incorrect Answer
      B A building owned by the company. Correct Answer Incorrect Answer
      C An un-drawn Letter of Credit (LC) or a Guarantee. Correct Answer Incorrect Answer
      D The equity capital of the company. Correct Answer Incorrect Answer
      E Interest income received from a road project. Correct Answer Incorrect Answer

      Solution

      Off-balance sheet items are potential obligations that haven't become "real" yet. A guarantee only becomes a liability if the borrower defaults, so it stays "off the balance sheet" until then (though capital must still be held against it).

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