Q. The “First Loss Default Guarantee (FLDG)” is often seen in news related to?
Answer: C
Notes:
Explanation: The Reserve Bank of India (RBI) has allowed First Loss Default Guarantee (FLDG) for fintech Lending Service Providers (LSP).
- The first loss default guarantee (FLDG) is a lending model between banks or non-banking finance companies (Regulated Entities) and lending service providers (fintech firms).
- In FLDG arrangement, the initial hit on a default is taken by a third party such as fintech firm that originated the loan.
- The fintech player (LSP) compensates lenders if the borrower defaults up to a certain threshold of the loan portfolio.
Source: FORUMIAS