Credit, Debt, and Finance

Microfinance is specifically designed to provide financial services to low-income individuals who lack access to traditional banking.

Correct Answer: All of the above

Credit cards allow for revolving credit, can be used to withdraw cash (cash advance), and are a standard payment method for goods and services.

The sentence is a fragment because it lacks a main verb for the subject 'application'. Removing 'sent' or changing the structure would fix it. Option B correctly identifies the problematic phrase.

As of 2011, the United States held the highest amount of external debt in absolute terms among all countries.

A credit risk is the risk of default on a debt that may arise from a borrower failing to make required payments. In the first resort, the risk is that of the lender and includes lost principal and interest, disruption to cash flows, and increased collection costs. The loss may be complete or partial. In an efficient market, higher levels of credit risk will be associated with higher borrowing costs. All the given options talk about the loan and can arise credit risk. Thus, option 4 is the correct answer. 

This rule, which was laid down in the famous case Devayanas Vs Noble states the rule of appropriation in running accounts like Cash Credit and Overdraft Accounts. As per this rule, each withdrawal in a cash credit account is considered as a new loan and each deposit as a repayment of the loan in the order in which it is made.

Revolving credit is very similar to a credit card. The lending institution grants you a maximum credit limit, which you can use to make purchases at any time and (usually) on any goods. Many small business owners and corporations use revolving credit to finance capital expansion or as a safeguard in the event of cash flow problems. 

As per Tandon's second method of lending, the borrower has to arrange 25% of current assets/working capital gap as margin. 

Deferred Payment Guarantee is a guarantee for a payment which has been deferred or postponed. The necessity to issue deferred payment guarantee arises in case of purchase of capital goods like machinery. Deferred Payment Guarantee is issued by the bank at request of customer when he purchases goods or machinery from a creditor on the terms of payment after a specified time in lump sum or in installments.

"Payment in due course” means payment in accordance with the apparent tenor of the instrument in good faith and without negligence to any person in possession thereof, under circumstances which do not afford a reasonable ground for believing that he is not entitled to receive payment of the amount therein mentioned as in "THE NEGOTIABLE INSTRUMENTS ACT, 1881".

The debt servicing cost that is the highest expenditure of the government is itself a factor that increases the fiscal deficit and increases the public debt. 

Banks usually charge higher interest on the money it lends than the interest it pays on deposits.  

Collateral is an asset of value that the lender can grab and sell if you fail to repay the debt as promised.