LEGAL AND REGULATORY ASPECTS OF BANKING (LRAB) 

Unit - 9: Types of Credit Facilities 

​Legal & Regulatory Aspects of Banking - Types of Credit Facilities 
Unit - 9 : Types of Credit Facilities 
Lending is a principal activity of a bank . Therefore , a banker for his success, as a lender , is required to acquaint himself with various types of credit facilities .

TYPES OF CREDIT FACILITIES :
Credit facility are broadly classified:
FUND BASED 
NON- FUND BASED
FUND BASED                      NON- FUND BASED
Cash Credits                        Bank guarantee
Overdrafts                           Acceptance Facility 
Bill Finance                        Letter of Credit (LC)
Term Loans                        Derivative Products
Demand loans             Underwriting &Credit Guarantee

Fund Based Credit Facilities
 Cash Credits / Overdrafts – Cash credit /Overdraft is an arrangement by which a banker allows his customer to borrow money up to a certain limit. Term Loans - Bill Finance
Non-Fund based
Credit Facilities Bank Guarantee Letter of Credit Facility
Rule in Clayton’s Case
Discharge of debit items by subsequent credits was enunciated in a case called Clayton’s case.

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