What is Loan Syndication?

Business & Management
#1

It is a group of banks that provide loan to a borrower. It consists of a lead bank that arranges all the other banks to form a group and all of them share the risk equally. The terms and conditions of the loan are also formed by the lead banks.

#2

Syndicated loans are basically loan commitment offered by a group of lenders to borrower(s). It is different from normal loans because these loans can be made on a best effort basis which means that the disbursed amount under the facility may vary from the loan amount mentioned in the loan agreement.

Banks in India fund standard revolving facilities to large borrowers through syndication which may also involve underwriting/ assignment of loans subsequently in order to reduce/ share risk exposure.