Banking · Payment Systems and Risk Management
In the context of the Two-Level Funds Transfer System for NEFT, which type of risk is entirely eliminated by the system requiring the originating bank to debit the customer's account (Level 1) before sending the payment instruction for inter-bank settlement (Level 2)?
Verified Solution4 OptionsUpdated: October 2026👁️1 View
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- 1Credit Risk from the bank to the customer due to a daylight overdraft.✓
- 2Operational Risk due to data communication network failure.
- 3Liquidity Risk at Level 2 due to a high net debit position of the bank.
- 4Settlement Risk at Level 2 due to central clearing system failure.
Correct answer
Credit Risk from the bank to the customer due to a daylight overdraft.
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