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Question

In which of the following facility the borrower can take money out as needed until the limit is reached, and as money is repaid, it can be borrowed again?

A Loan of Credit Correct Answer Incorrect Answer
B Line of Credit Correct Answer Incorrect Answer
C Credit Draft Correct Answer Incorrect Answer
D Line of Credit Draft Correct Answer Incorrect Answer
E None of the above Correct Answer Incorrect Answer

Solution

  • The Line of Credit is not a grant but a ‘soft loan’ provided on concessional interest rates to developing countries, which has to be repaid by the borrowing government. 
  • It is a credit facility extended by a bank or any other financial institution to a government, business or an individual customer, that enables the customer to draw the maximum loan amount.

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