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Answer

Correct Option is Issuance of Letters of Credit

Fund based business of commercial banks:
The facilities like Overdrafts, Cash Credit A/c, Bills Finance, Demand Loans, Term Loans, etc, wherein the immediate flow of funds available to borrowers, are called funds based facility.
The non-fund based facilities like issuance of letter of guarantee, letter of credit wherein banks get fee income and there is no immediate outflow of funds from the bank.
A letter of credit is a document that guarantees the buyer's payment to the sellers.
It is issued by a bank and ensures the timely and full payment to the seller.
If the buyer is unable to make such a payment, the bank covers the full or the remaining amount on behalf of the buyer.
So it is a credit-based activity of commercial banks.
Therefore, Issuance of Letters of Credit is not the fund based business of commercial banks.

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