State the meanings of Term Loan. Cash Credit and Borrowing Rate.
3 years ago
Banking
Term Loan:
Medium-term loans and long-term loans are generally known as Term loans’. These loans are granted for more than one year for heavy repairs, expansion of units, modernisation/renovation, etc. Such loans are sanctioned against the security of permanent immovable assets.
Cash Credit:
A cash credit is an arrangement by which the customer (borrower) is allowed to borrow money upto a certain limit. This is a permanent arrangement and the borrower need not draw the sanctioned amount at once, it draws the amount as and when required.
Borrowing Rate:
On the deposits received, the bank pays interest to the depositors at a specified rate. This is known as the borrowing rate.
Susmita Sah
Jan 16, 2022