New RBI Grade B 2024 Batch 7 45+ 20 Days Study Plan; Download Now !!!
Register

Question

What is project financing?

A A form of financing where the borrower's creditworthiness is the main consideration Correct Answer Incorrect Answer
B A form of financing where the lender's creditworthiness is the main consideration Correct Answer Incorrect Answer
C A form of financing where the project's cash flow is the main consideration Correct Answer Incorrect Answer
D A form of financing where the project's collateral is the main consideration Correct Answer Incorrect Answer
E All of the above Correct Answer Incorrect Answer

Solution

In project financing, the project's cash flow is one of the main considerations. Project financing is a financing technique that is specifically designed for large-scale projects, such as infrastructure, energy, or mining projects, that require significant capital investments. In project financing, the lender evaluates the projected cash flow of the project to determine the borrower's ability to repay the loan. The lender provides financing to a special purpose vehicle (SPV) that is set up to own and operate the project. The SPV is responsible for raising the financing, acquiring the necessary assets, and managing the project operations.

Practice Next

Relevant for Exams:

×
×