In banking language, which among the following is called Contingent Liability of the banks?

Answer: [B] Non fund based lending

In Non-fund based lending, bank does not make any funds outlay but only gives assurance. The “letter of credit” and “bank guarantees” fall into the category of non-funding loans. The non-funding loan can be converted to a fund-based advance if the client fails to fulfil the term of contract with the counterparty. In banking language, the non-funding  advances are called Contingent Liability of the banks.

This question is a part of GKToday's Integrated IAS General Studies Module