Banking · Retail Lending
What is the primary operational advantage for a bank when sanctioning an advance against its own Time Deposit Receipts (TDRs) compared to other loans?
Verified Solution4 OptionsUpdated: October 2026👁️1 View
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- 1The bank can charge any high interest rate as it is completely free from RBI's ceiling rates.
- 2The process does not require any legal charge or creation of lien.
- 3The advance carries virtually zero credit risk because the bank's own deposit acts as 100% security with a lien marked.✓
- 4The interest earned on such deposits is fully exempted from Tax Deducted at Source (TDS).
Correct answer
The advance carries virtually zero credit risk because the bank's own deposit acts as 100% security with a lien marked.
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