Consider the following statements

Consider the following statements:
Statement-I: Syndicated lending spreads the risk of borrower default across multiple lenders.
Statement-II: The syndicated loan can be a fixed amount/lump sum of funds, but cannot be a credit line.
Which one of the following is correct in respect of the above statements?

(a)

Both Statement-I and Statement-II are correct and Statement-II explains Statement-I

(b)

Both Statement-I and Statement-II are correct, but Statement-II does not explain Statement-I

(c)

Statement-I is correct, but Statement-II is incorrect*

(d)

Statement-I is incorrect, but Statement-II is correct

Explanation

Answer: (c) Explanation: • Statement-I: Syndicated loan is a form of loan business in which two or more lenders jointly provide loans for one or more borrowers on the same loan terms and with different duties and sign the same loan agreement. Syndicated lending spreads the risk of borrower default across multiple lenders. o This statement is correct because syndicated lending involves multiple lenders coming together to provide a loan to a single borrower, thereby spreading the risk of default among the participating lenders. • Statement-II: The syndicated loan can be a fixed amount/lump sum of funds, but cannot be a credit line. o This statement is incorrect. Syndicated loans can be structured in various ways, including as a fixed amount/lump sum or as a revolving credit line. A revolving credit line allows the borrower to draw, repay, and redraw funds up to a certain limit, providing more flexibility. https://www.civilsdaily.com/news/why-special-situation-funds-are-necessary/