Q. Explain about Loans - Forms of Bank Finance?
When a bank makes an advance in lump-sum against some security it is called a loan. In Case of a loan, a specified amount is sanctioned by the bank to the customer. The entire loan amount is paid to the borrower ether in cash or by credit to his account. The borrower is required to pay interest on the entire amount of the loan from the date of the sanction. A loan may be repayable in lump sum or installments. Commercial banks generality provide short-term loans up to one year for meeting working capital requirements. But now-a-days term loans exceeding one year are also provided by banks. The term loans may be either medium-term or long-term loans.