Question

Which is called as the most basic principle of lending?

Answer 1

yeah sure for your help


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Here is your answer
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we know that bank follow following principles of lending

1. Liquidity

2. Safety

3. Diversity

4. Stability

5. Profitability


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According to me profitability is the is called as the most basic principle of lending because it is largely the government securities of the centre, state and local bodies that largely carry the exemption of their interest from taxes

The bank should invest more in such securities rather than in the shares of new companies which also carry tax exemptions .

This is because shares of new companies are not safe investments .


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Answer 2

Answer:

Lending principles can be conveniently divided into two areas (i) activity, and (ii) individual. 5. safety • The safety of funds lent is another principle of lending. Safety means that the borrower should be able to repay the loan and interest in time at regular intervals without default.