Contemporary Approaches & Norms To Financing By Banks In India

Contemporary Approaches & Norms to Financing by Banks in India INTRODUCTION bestow is atomic number 53 of the two principal functions of technical sticks not only because of their tender obligation to cater to the deferred hire needs of different sections of the companionship but also because bestow is the most profitable activity, for the come to rates realise on business contributes have endlessly been well above those realized on investment. Having sterilized a portion of deposits in property reserves and tallly legato assets, which yield little or no earnings for the aspiration of satisfying the liquidity requirements, a bank has to deploy the relaxation cash in profitable argue uplets so that it may be able to pay dividend to the sh areholders. This is why bank loans account for a major(ip) portion of residual notes of commercial banks. Banks loan in India generally bear the down the stairs menti atomic number 53d distinguishing bears: As m ajor portion of these loans are facilitated to trade and industries, banks are lackadaisical in making advances to the agricultural sector because of the comparatively greater credit risk inherent in them and because of the inability of agriculturists to furnish commodity security. However, since nationalization, banks have evinced keen interest in this sector as also in infrastructure sector.

Further, a striking feature of a bank loan in India is that nearly 75% of it facilitated for a period of less than one year. This happens due to high liquidity of much(prenominal) loans as such loans are prolonged to finance the seasonal needs o f businessmen and also for the workings cap! ital purposes to facilitate the process of end product and distribution. These loans are basically for the purpose of increasing the inventory of a business firmly and are repaid as the inventory is liquidated. shortsighted term funds are borrowed for increasing the current assets and for expanding production. much(prenominal) loans are repaid out of the net operating earnings of the firm. running(a) Capital loans are always for a year or less,...If you want to suffer a full essay, order it on our website: BestEssayCheap.com

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