Explain loan..............
Answers
★ Loan is a thing that is borrowed, especially a sum of money that is expected to be paid back with interest.
★ Banks provide loans to people at some interest rate.
★ Banks keep only 15% of their total deposits as cash to meet the day-to-day withdrawal demands.
★ Rest of the cash is extended as loans to those who need it (borrowers) at a specific rate of interest.
★ The interest provided by banks to depositors is less than the interest charged by banks from borrowers on loans.
★ This difference is the main source of income of banks.
★ Banks provide housing loans, vehicle loans, farm loans, education loans, personal loans etc. to meet the specific requirements of borrowers.
★ Debt Trap: It is a situation in which a person is caught in the vicious cycle of debts. He/she takes loans for meeting his/her requirements and on being unable to pay back the loan, takes a fresh loan to repay the old loan. This leaves him/her indebted all through his/her life.
Answer:
Loan is a thing that is borrowed, especially a sum of money that is expected to be paid back with interest.
★ Banks provide loans to people at some interest rate.
★ Banks keep only 15% of their total deposits as cash to meet the day-to-day withdrawal demands.
★ Rest of the cash is extended as loans to those who need it (borrowers) at a specific rate of interest.
★ The interest provided by banks to depositors is less than the interest charged by banks from borrowers on loans.
★ This difference is the main source of income of banks.
★ Banks provide housing loans, vehicle loans, farm loans, education loans, personal loans etc. to meet the specific requirements of borrowers.
★ Debt Trap: It is a situation in which a person is caught in the vicious cycle of debts. He/she takes loans for meeting his/her requirements and on being unable to pay back the loan, takes a fresh loan to repay the old loan. This leaves him/her indebted all through his/her life.