Working Capital Management Question:
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Tell me in what form can a bank disburse the amount of assistance it has extended to a company?

Answer:

A bank can disburse the amount of assistance in any of the following forms:

1) Non-fund based lending
a. Bank Guarantee
b. Letter of Credit

2) Fund based lending
a. Loan
b. Overdraft
c. Cash Credit
d. Bills purchased/Discounted
e. Working Capital term loans
f. Packing Credit

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What is letter of credit (LC)?Explain what is non-fund based lending?