Question

Distinguish between bank credit and trade credit

Answer 1

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So, trade credit strictly refers to the routine business activity. Bank Credit Commercial banks provide funds for different purposes and for different time periods to firms of all sizes by way of cash credits, overdrafts, term loans, purchase/discounting of bills, and issue of letter of credit.

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Answer 2

Answer:

Trade Credit

is inter-firm trade credit between buyers and sellers.

Banks tend to refer to this as open account transactions, where goods are shipped in advance of payment, and cash-in-advance transactions, where payment is made before shipment.

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