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    Question

    A bank extends fund based, non-fund based, value added

    and internet based services to its customers. Which among the following is not a fund based service?
    A Term Lending Correct Answer Incorrect Answer
    B Bills Discounting Correct Answer Incorrect Answer
    C Short term finance Correct Answer Incorrect Answer
    D Bank Guarantee Correct Answer Incorrect Answer
    E None of the above Correct Answer Incorrect Answer

    Solution

    Bank Guarantee is the non-fund based service since the bank’s money is not tied up in extending the guarantee, the payment of which is made only in the event of default by the principle debtor. In rest of the cases,  the bank needs to block its fund for the purpose of lending.

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