General Studies · Working Capital Finance
When assessing a request for a Non-Fund Based credit facility like a Letter of Credit (LC) for the import of raw materials, which specific risk is the bank primarily assessing by analyzing the relationship between the Usance period and the borrower's operating cycle?
Verified Solution4 OptionsUpdated: October 2026👁️1 View
Share:
- 1The risk that the foreign supplier will fail to ship the goods after the Letter of Credit has been opened by the issuing bank.
- 2The risk of exchange rate volatility impacting the final payment in Indian Rupees at the time of crystallization of the bill.
- 3The risk of the borrower misutilizing the bank's credit by getting an interest-free credit period longer than their actual manufacturing and sales process.✓
- 4The risk that the documents provided under the Letter of Credit might be fraudulent or non-compliant with UCPDC 600 rules.
Correct answer
The risk of the borrower misutilizing the bank's credit by getting an interest-free credit period longer than their actual manufacturing and sales process.
Download Single Question PDF
Save this question and verified answer as a clean study sheet with live clickable link.
👥
Share with Friends & Study Groups
Challenge your peer aspirants on WhatsApp or Telegram to solve this question!
Online Test Series
Start Free Mock Test →Preparing for General Studies?
Practice full-length mock tests with real exam timers, instant score analysis, and all-India ranking.
Chapter Practice
Practice Working Capital Finance MCQs →Want more practice questions on Working Capital Finance?
Solve complete topic-wise tests with detailed solutions on GkGet.
Related Practice Questions
Recommended practice questions in General Studies · Working Capital Finance