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Wednesday, April 15, 2015

Definition / Important / Objectives of Banks loan or Credit or Advances.

 M N H     9:00:00 AM     Uses of Banks Fund     1 comment   

Definition of Banks Credit / Advances
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Bank lends which money, goodwill, and blessing or faith to its clients for gaining profit is called banks credit or advance. Collecting money from peoples, bank preserves a few part of  that money to its own for meeting daily current demand of client and the remainders are invested or given loans. Banks lend rather its glory, fame, goodwill & belief than only money to peoples through various documents & deeds.


Bank credit includes a cash loan and any other form of financial accommodation. ( F E Perry)

Bank loan and credit / advance is a specific sum of money lent by a bank to a customers. (Oxford Dictionary of Business)

An advance is a payment on account or before a a contract is completed or legally due. (C J Woeifel)




Importance / Significance / Objectives /Advantages of Bank Loan.
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In the modern competitive age there are more importance & significance of bank loan to increase the mobility of trade, commerce, economics & society. None can improve his luck or expend the business, commerce even social organization investing his own funds. Bank loan is mandatory to improve foreign business for keeping economic flow in balanced or economic certainty. The importance/significance/objectives/advantages of banks loan are given below with detail:


1. Money supply:
A great deal of money is needed in any types of financial activities. Though it is difficult to provide this money from own funds, bank ensures the preservation of money through loan.


2. Development of home trade:
Bank keeps a great role for the development of home trade by investing capital, ensuring financial payment and safety transformation of finance.


3. Expansion of foreign trade:
Bank expands and develops the foreign trade by providing and ensuring financial help to the importer & exporter.


4. Industrialization:
Banks is capable to keep a great role  to establish new industries and to expand those organization by giving  a great deal of money as loan.


5. Agricultural Development :
A huge amount of money is needed to direct, develop & expand agricultural activities. Banks can vigorously improve this sectors by providing loans to poor farmers in easy conditions.


6. Development of small Industry :
In the Development of small Industry banks provide huge amount  of lone.


7. Increasing production.

8. Increasing the purchasing power to the general peoples.

9. Development of communication system.

10. Assisting journey.
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