Bank Loans
Banks lend money to people in need by accepting deposits from the public against certain collateral. Loans are charged at a higher interest rate than deposits. The interest rates for different types of loans also vary. The collateral accepted by banks for lending is physical assets (gold ,
property rights, etc.) ,
fixed deposit certificates , and salary slips.
Loan refers to the process by which banks provide deposits received from customers to those in need against certain collateral. Loan interest rates vary based on loan tenure and loan requirement. Loans provided by commercial banks are cash loans and overdrafts. Cash loan is a loan given to needy individuals and institutions on the security of assets. Overdraft is Special loan for traders and industrialists. Overdraft is a loan given when there is not enough money to withdraw from a current account. There are three types of loans - short-term, medium-term and long-term loans. Loans with a repayment period of less than one year are called short-term loans. Loans with a repayment period of up to three years are medium-term loans. Loans with a repayment period of more than three years are long-term loans.
Moratorium refers to giving more time to repay loans. Moratorium given on bank loans is in the event of drought and natural disasters. Loans that are not repaid on time are called Non Performing Assets. Loans that are repaid on time are called Performing Assets. The law that allows the bank to seize and sell the property and house given as collateral in case of continuous default in repayment of a loan amount exceeding one lakh rupees is SARFAESI Act (2002).
Agricultural loans - Agricultural loans are the lowest interest loans granted by banks. These Loans are provided without collateral and interest. As per the government directive, Agricultural loans should be a certain percentage of the total loans given by the bank.
Housing loan - A loan for purchasing or renovating houses, the amount of which is determined according to the area of the house and the person's repayment capacity.
Cash Credit - Loan granted against the amount of the customer's deposit.
Mortgage Loan - A loan obtained by pledging land to a bank.
Gahan - The system of taking loans by depositing property documents in cooperative banks is known as Gahan.
Vehicle Loan - A loan that provides a fixed amount of twice the monthly income or a fixed percentage of the vehicle price to salaried officials, traders, etc. to purchase a vehicle. The maximum repayment period for vehicle loan is 7 years.
Gold Loan - The fastest and easiest loan to get is Gold Loan. Items not accepted for gold loan are gold coins and gold bars.
Personal loan - A loan given by banks based on an individual's income and repayment capacity.
Reverse Mortgage Loan - A system provided by banks to senior citizens who own their own homes to earn income by mortgaging them.
Business loan - short-term loan provided by banks to start industries, for commercial purposes and for traders (this is useful for buying goods, machinery and land).
Educational Loan - Loans provided to students studying medical , engineering , paramedical and other professional courses.
Kisan Credit Card - Loans provided to farmers with agricultural land based on the harvest period and costs for each crop.
Secured Loans - Loans taken against gold ornaments or other property are called.
Unsecured Loans - Loans provided on the guarantee of individuals are called -
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