Friday, 3 January 2020

Lendings-4 , Banking Fundamentals to Know for Students.

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Loans against Term deposit : 

Banks often lend against their term deposits, such as fixed deposits, cumulative deposits, recurring deposits, etc. The nature of the facility granted against the security of term deposits may either be a loan or an overdraft. The nature of charge is a pledge in this case.   

Margin and rate of Interest: 

Normally banks lend up to ninety percent of the deposit amount. The rate of interest charged is above the interest rate offered on the deposit.  

Deposit in the name of a minor:  

No loan can be granted against the security of deposit receipt standing in the name of a minor.  
Loan against Gold Ornaments : 

1. The amount of loan on ornaments depends upon the market value and purity of the gold. Normally banks keep a margin of around 30 % on the market value of ornaments. 

2. The rate of interest varies with the purpose of the loan. 

3. The repayment period depends upon the purpose of the loan. If the loan is for agricultural purposes, the repayment period normally coincides with the harvest and marketing of the produce.  

4. On the closure of the loan, the ornaments should be returned to the pledger or his / her representative (authorized).

5. Even after the closure of the loan the banker can hold the ornaments in case other loans are due under the same name.         

6. Normally banks appoint appraisers for the purpose of appraising the purity of Gold ornaments.  

7. The loan granted under this category is also subject to NP.

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