Banks provide us with various types of loans. Out of the money that comes to the bank in the form of deposits, a certain amount is kept in the cash fund and the rest of the money is lent by the bank. Today I will tell you that banks give us loans in the following ways.
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Which loans do bank give.pdf
1. Which loans do bank give? Type of bank loans
Banks provide us with various types of loans. Out of the money that comes to the bank in
the form of deposits, a certain amount is kept in the cash fund and the rest of the money is
lent by the bank. Today I will tell you that banks give us loans in the following ways.
Advancing of loans:--
1.) Cash Credit
2.) Overdraft
3.) Demand Loans
4.) Short - term Loans
2. 1.) Cash Credit :--
Under cash credit, the borrower is given the right to withdraw a certain amount on the basis
of a certain security. Within this limit, the borrower keeps on withdrawing the money as per
the requirement and also keeps on depositing it. In this stage the bank charges interest only
on the amount actually withdrawn. This is called cash credit.
2.) Overdraft :--
Under overdraft, whenever the borrower needs more amount than his deposit in the bank,
then the borrower takes permission from the bank to withdraw more than his deposit as per
an agreement. The amount withdrawn is called overdraft. This facility is available only to
trusted customers for a short period of time.
3.) Demand Loans :--
These loans are loans which are given in the form of a fixed amount. There is no fixed
maturity period to return them. Interest on these loans starts charging immediately after the
loan is sanctioned. Even if the borrower withdraws only a part of the total debt from that
account by check. These loans are given against personal security or against financial
assets or durable goods.
4.) Short - term Loans :--
Two types of loans are included in short term loans.
i.) Personal Loan
ii.) Working Capital Loan.
Interest on the entire amount of such loans starts from the same day. From the
day it is written to the borrower's account. Generally these loans are given on collateral.
Hence, these loans are very secure.
Conclusion :--
Now you must have come to know that how banks provide loans to the public, so that
whenever you need a loan, you can take a loan from the bank as per your convenience. I
hope that the information given by me is of some use to you.