Detailed Explanation:

Answer: Option 3 — Statement-I is correct, but Statement-II is incorrect

Syndicated lending is a financial arrangement where multiple lenders collectively provide a loan to a single borrower, thereby distributing the credit risk among all participating lenders. Statement-II is incorrect because syndicated loans can take various forms including not only fixed-amount term loans but also revolving credit facilities (credit lines), thereby providing flexibility to borrowers.

✅ Statement-I – Correct: Syndicated lending inherently spreads the risk of borrower default across multiple lenders as each lender contributes only a portion of the total loan amount.

❌ Statement-II – Incorrect: Syndicated loans can be both fixed-amount/lump sum funds as well as revolving credit lines, providing various financing options to borrowers.

📝 Short Notes: Syndicated Lending

• Definition: A loan offered by a group of lenders (syndicate) to a single borrower, typically for large-scale financing needs.
• Lead Arranger: One or more banks act as lead arrangers who structure the loan, negotiate terms, and coordinate with other lenders.
• Types: Can be term loans (fixed amount disbursed at once) or revolving credit facilities (credit line that can be drawn, repaid, and redrawn).
• Risk Distribution: Each lender bears only a proportionate share of the credit risk, making it attractive for large loans.
• Common Uses: Infrastructure projects, corporate acquisitions, large capital expenditures, and refinancing existing debt.
• Advantages: Access to larger loan amounts, diversification of risk for lenders, and competitive pricing for borrowers.