Generally, diversification helps reduce the overall credit risk exposure for financial institutions by reducing their overall expected chargeoff rates.

Fund-based exposure is actual lending from public banks. Non-fund based exposure is credit extended by private banks with no actual lending.

Fund-based exposure is actual lending from public banks. Non-fund based exposure is credit extended by private banks with no actual lending.

if a borrower has default in payment ...so it a loss to bank...n the percentage of loss is the rate on its credit exposure

T. H. Donaldson has written:

'Credit risk and exposure in securitization and transactions' -- subject(s): Bank loans, Credit, Credit control, Risk management