Finance Helping Hands

The term ‘loan’ refers to the amount borrowed by one person from another. The amount is in the nature of loan and refers to the sum paid to the borrower. The main method of lending by all the banks of the world is cash credit and about 70 per cent of the total bank credit is cash credit. Under this system, the banker fixes a limit for each customer, called cash credit limit, up to which the customer is allowed to take a loan against the security of tangible assets or guarantee. Loan is the amount borrowed from bank. The nature of borrowing is that the money is disbursed and recovery is made in instalments. While lending money by way of loan, credit is given for a definite purpose and for a pre-determined period. Cash credit is a flexible system of lending under which the borrower has the option to withdraw money as and when required. Under this arrangement the banker specifies a limit of credit for the customer, up to which the customer is allowed to withdraw. The cash credit limit is ...

(1) Acceptance of Deposits   : Banks accept some unutilized amount from the public as deposits. The bank pays interest to the depositor. The biggest responsibility of a bank is to maintain the confidence of the depositors/savers. Banks accept different types of deposits. On which the interest rate is different. Banks accept deposits mainly in four ways: (i) Savings Account (ii) Current Account (iii) Recurring Account (iv) Fixed term account (2) Depositing  :  Banks  accept deposits through various types of accounts. Thus, of the money received by the bank through deposits Elsewhere does piranha. Bank accepts deposits and gives interest to savers. So it lends money to needy individuals at a rate higher than the rate of interest paid to depositors. Banks do not earn from the difference in interest rates. The Bank lends as follows: (a) By Loan :  Bank  gives loans for long term or short term. Some types of loans require a closing. While in some types of loans,...