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प्रश्न
Explain the following term/concept:
Cash Credit.
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उत्तर
(1) Under this arrangement, a banker asks the borrower to open a separate account. Then bank places sanctioned loan amount to the credit of this account. The customer is allowed to withdraw from this account as and when he needs money and is allowed to deposit in his account any surplus that he has.
The customer is charged interest on the actual am0unt utilised by him.
(2) Cash credit arrangement is for a longer period than an overdraft. The customer can save interest by depositing the excess amount not needed and withdrawing the amount as and when he needs it. This system of lending is very popular only in India among traders, industrialists, etc. Bank demands some tangible securities such as stock of raw material, finished goods, etc
