Correct Option (Question Dropped by UPSC)
(C) Statement-I is correct, but Statement-II is incorrect.
Explanation
Statement-I: Syndicated lending involves a group of lenders (a syndicate) collectively providing a large loan to a single borrower. This structure inherently distributes the risk of the borrower's potential default among multiple financial institutions. Consequently, the exposure for any individual lender is reduced, as losses, if any, are shared proportionally.
Statement-II: Syndicated loans are not exclusively structured as fixed-amount term loans. They can also take the form of revolving credit facilities, which function as credit lines. In a revolving credit facility, a borrower can draw, repay, and redraw funds up to a pre-approved limit over a specified period. Furthermore, syndicated facilities can be structured as a combination of term loans and revolving credit lines. Therefore, the assertion that a syndicated loan cannot be a credit line is factually inaccurate.
Incorrect Options
Option 1 is incorrect because Statement-II is incorrect and thus cannot explain Statement-I.
Option 2 is incorrect because Statement-II is incorrect.
Option 4 is incorrect because Statement-I is correct.