Advertisements
Advertisements
Question
______ is an asset that the borrower owns and uses as a guarantee until the loan is repaid to the lender.
Advertisements
Solution
Collateral is an asset that the borrower owns and uses as a guarantee until the loan is repaid to the lender.
Explanation:
This asset, which might include property, vehicles, or gold, acts as financial security for the lender, reducing risk. If the borrower fails to make loan payments, the lender has the legal authority to seize and sell the asset to recoup the unpaid sum.
APPEARS IN
RELATED QUESTIONS
"Deposits with the banks are beneficial to the depositors as well as to the nation." Explain the statement
How can the formal sector loans be made beneficial for poor farmers and workers? Suggest any five measures.
What are the reasons why the banks might not be willing to lend to certain borrowers?
Manav needs a loan to set up a small business. On what basis will Manav decide whether to borrow from the bank or the moneylender? Discuss.
In India, about 80 per cent of farmers are small farmers, who need credit for cultivation.
Why might banks be unwilling to lend to small farmers?
In India, about 80 per cent of farmers are small farmers, who need credit for cultivation.
Suggest some ways by which small farmers can get cheap credit.
Formal sources of credit does not include ______.
How can more employment be created in agriculture sector alone ? Explain any three ways.
Why do banks or lenders demand collateral against loans?
Answer the following question.
Explain the importance of 'collateral'.
