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In which loan type is interest charged only on the amount withdrawn, not the full sanctioned limit?

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Question

In which loan type is interest charged only on the amount withdrawn, not the full sanctioned limit?

Options

  • Overdraft

  • Cash Credit

  • Term Loans

  • Fixed Deposit

MCQ
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Solution

Cash Credit

Explanation: 

Borrowers withdraw as needed against security, such as shares, paying interest only on the amount used; popular with Indian businessmen.

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