Banking · Working Capital Facilities
The Discounting of Usance Bills by a bank to a customer is a fund-based facility characterized by which of the following?
Verified Solution4 OptionsUpdated: October 2026👁️1 View
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- 1No credit risk for the bank as the buyer is always the sole obligor.
- 2Immediate disbursement of funds to the seller, with recourse to the seller in case of non-payment by the buyer.✓
- 3The bank merely acting as a collection agent without advancing any funds until the due date.
- 4The automatic conversion of the facility from fund-based to non-fund-based upon the bill's maturity.
Correct answer
Immediate disbursement of funds to the seller, with recourse to the seller in case of non-payment by the buyer.
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