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Question

Which of the following is not a right statement for a Drawing Power?

A the total exposure that a bank can take on a particular client for facilities like cash credit, overdraft, export packing credit, non-funded exposures Correct Answer Incorrect Answer
B It applies only to fund-based working capital financing facilities. Correct Answer Incorrect Answer
C It is used as a part of the credit monitoring practices of the lending institution. Correct Answer Incorrect Answer
D It refers to the amount calculated based on primary security less margin on a particular date Correct Answer Incorrect Answer
E All are correct Correct Answer Incorrect Answer

Solution

the total exposure that a bank can take on a particular client for facilities like cash credit, overdraft, export packing credit, non-funded exposures is called a sanctioned limit and it is different from Drawing Power. Rest of the statements are correct.

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