Question

Read the passage given below and answer the questions that follow.

ABC Ltd. is a hardware manufacturing company listed on National Stock Exchange. The company operates only in Delhi-NCR. The management plans to expand their area of operation across the country. They require funds for their expansion plans.

1. Briefly explain the source of finance for loans from financial institutions.
2. State whether the Loans from Financial Institutions source can be used by ABC Ltd. or not for raising funds. Give a reason to support your answer.

Answer 1

1. Loans from financial institutions refer to medium or long-term finance provided by specialized institutions such as IDBI, IFCI, SIDBI, EXIM Bank, and others. These institutions offer loans for business expansion, modernization, diversification, or setting up new ventures. The repayment period usually ranges from 3 to 10 years or more, and such loans often come with structured repayment terms and expert guidance.
2. Yes, ABC Ltd. can use loans from financial institutions to raise funds. ABC Ltd. is a hardware manufacturing company listed on the National Stock Exchange and plans to expand its operations across the country. Financial institutions specifically support such industrial expansion and development projects, making this a suitable and accessible source of finance for ABC Ltd.