What is the difference between fund based and non-fund based loans?

A fund based financial service involves credit offered by banks in the form of loans, overdrafts and other cash transactions. In a non-fund based financial service the bank does not deal with funds or cash transactions. Some examples of this type of service are bonds, letters of guarantee and letters of credit.

What is the difference between fund based facilities and non-fund based facilities?

based facilities are those, at the time of sanction which do not involve such outflow of the bank’s funds. Typical examples of fund based facilities are term loan, cash credit and overdraft and that of non-fund based facilities are letters of credit, bank guarantees, letter of comfort, etc.

What is the basic difference between traditional lending and asset based lending?

In contrast to traditional bank lending, where the borrowing company’s operations are evaluated and its future cash flow is projected, asset-based loans are based on the collateral put up for the loan. The most typical type of ABL is made against the business’s accounts receivables.

What is non-fund based lending?

The Non-Fund based Credit Facilities are nature of promises made by Banks in favour of a third party to provide monetary compensation on behalf of their clients, where the lending bank does not commit any physical outflow of funds. In other words, if the debtor fails to settle a debt, the bank covers it.

What is the difference between fund based accounting and non fund based accounting?

1. Each fund is treated as a separate fiscal and financial accounting entity. 2. Specific Funds can be used for the purposes for which those funds were obtained; however, the General Fund can be used for meeting general and administrative expenses.

What is the difference between fund based and fee based?

— A bank or NBFC offers two types of products: fee-based and fund-based. — Fund-based products are also subject to capital adequacy norms and tighter regulation for non-performing loans. — The profit margins in fee-based products may be lower, but since they do not require high capital investment, they are profitable.

What are fund based and non fund based advances?

In banking language, the non-funding advances are called Contingent Liability of the banks. The Fund based lending is direct form of loans on which actual cash is given to the borrower by the bank. Such loan is backed by primary and / or a collateral security.

What is the difference between ABL and revolver?

A revolving line of credit (revolver) is the most common type of ABL. The facility allows the borrower to draw funds, repay draws, and redraw funds over the life of the loan. A revolver is commonly used to finance short-term working assets, most notably inventory and accounts receivable.

What is traditional lending?

A traditional term loan is financing provided a bank that provides financing that is paid back incrementally over a fixed period of term. Traditional lenders that offer term loans include large and small banks, community banks, credit unions and SBA lenders.

What is fund based lending?

The Fund based lending is direct form of loans on which actual cash is given to the borrower by the bank. Such loan is backed by primary and / or a collateral security.

What is the example of non fund based service?

The non fund based financial services of the public sector banks include loan syndication, consultancy and advisory services, capital issue management etc.

What is the difference between fund accounting and regular accounting?

The key difference in for-profit and nonprofit standards is the concept of fund accounting, which focuses on accountability rather than profitability. Whereas a profit entity would have a general ledger, which is a single self-balancing account, nonprofits typically have a number of general ledgers, or funds.