17 Questions
What is the determining factor for the amount of the Domestic Bills Purchase Line (BP Line)?
Average Daily Balance for the past 6 months
What serves as collateral for the Check Discounting Line?
Check itself
What happens if a check is dishonored in the Check Discounting Line?
Prevailing lending rate + 36% p.a. penalty is charged
What type of collateral is required for Trust Receipt agreements?
The goods received until payment
What is the term for the Line Expiry in a Domestic Bills Purchase Line?
One year from approval date; subject to renewal
Which type of loan/credit facility requires a comprehensive check before clearing checks?
Check Discounting Line
What is a common characteristic of a balloon loan?
Higher interest rates
Which of the following is NOT a common example of revolving credit?
Mortgages
What is one key difference between a revolving line of credit and a consumer credit card?
Revolving line of credit allows money transfer without purchase
What does a bank typically do with a revolving credit line as long as the account remains in good standing?
Raise the credit limit
What do lenders consider before setting a credit limit for a borrower in a revolving credit line?
The borrower's ability to pay
What is the purpose of bank reserves?
To ensure banks can meet their liabilities in case of sudden withdrawals
What is the main function of a gold reserve held by a national central bank?
As a store of value
Which type of loan involves borrowing a lump sum of money that is paid back periodically with interest?
Short term loan
What is the primary characteristic of a trust receipt agreement?
It allows businesses to take possession of goods while their bank retains ownership
Which of the following is NOT a type of term loan?
Revolving credit line
How does a central bank use bank reserve levels as a tool in monetary policy?
By lowering reserve requirements to slow economic growth
Test your knowledge on different banking facilities such as Domestic Bills Purchase Line and Check Discounting Line. Learn about the requirements, line amounts, expiry dates, and collateral needed for these financial services.
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