Multiple choice

When more than one bank is allowing credit facilities to one party in coordination with each other under a formal arrangement, the arrangement is generally known as

  1. participation

  2. consortium

  3. syndication

  4. multiple banking

  5. None of these
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

A consortium is a formal arrangement where multiple banks jointly provide credit facilities to a single borrower, sharing both the risk and the business. This is distinct from syndication (where banks play different roles) or multiple banking (where banks independently lend to the same borrower without coordination).

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