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Modes of short-term financial assistance
Banks grant
short-term financial assistance by way of cash credit, overdraft and bill
discounting.
a) Cash Credit
Cash credit is
an arrangement whereby the bank allows the borrower to draw amounts upto a
specified limit. The amount is credited to the account of the customer. The
customer can withdraw this amount as and when he requires. Interest is charged on
the amount actually withdrawn. Cash Credit is granted as per agreed terms and
conditions with the customers.
b) Overdraft
Overdraft is
also a credit facility granted by bank. A customer who has a current account
with the bank is allowed to withdraw more than the amount of credit balance in
his account. It is a temporary arrangement. Overdraft facility with a specified
limit is allowed either on the security of assets, or on personal security,
or both.
c) Discounting
of Bills
Banks provide
short-term finance by discounting bills, that is, making payment of the amount
before the due date of the bills after deducting a certain rate of discount.
The party gets the funds without waiting for the date of maturity of the bills.
In case any bill is dishonoured on the due date, the bank can recover the amount from
the customer.
Read Complete Banking Awareness for IBPS Clerks Here
Read Complete Banking Awareness for IBPS Clerks Here
Hi Mam,
ReplyDeleteI am Krishnan. I did my B.E.ECE in 2008.Then I did a course in ,NET and Netwoking.It was hard for me to get a IT Job due to severe recession till 2010.Eventhough i tried for IT Jobs upto 2012.From 2012 I have been preparing for banking exams.Now my aim is to get a bank job.I have appeared for 5 bank exams but I didn't get selected.Still iam consistently trying or bank jobs.Now i have no Experience.What to answer in interview if i get selected?.Please give me suggestion for me about the experience.