Banking · Prudential Norms
Which of the following is a key prudential reason for a bank to require a No-Objection Certificate (NOC) from the existing lending bank before opening a Current Account for a borrower with high credit exposure?
Verified Solution4 OptionsUpdated: October 2026👁️1 View
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- 1To prevent the customer from availing any non-fund-based credit facility (like Bank Guarantee) from the non-lending bank.
- 2To ensure the lending bank can effectively monitor the customer's cash flow and end-use of funds.✓
- 3To comply with the Deposit Insurance and Credit Guarantee Corporation (DICGC) norms.
- 4To enforce the lending bank's lien over the Current Account balance.
Correct answer
To ensure the lending bank can effectively monitor the customer's cash flow and end-use of funds.
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