Everybody should have a basic knowledge of various types of loans granted by Banks. Why do Banks lend? It’s because their main task is to accept deposits from the public for the purpose of lending. They make profit only by way of lending their money so that the margin between interest earned on their lending and interest paid on deposits is predominantly treated as profit after deducting expenses like salary, rent, etc.

Segregations of loans

  Loans can be availed by individuals, sole proprietors, partnership firms, Private Limited and Public Limited Companies. Secured and unsecured loans: If a borrower buys machinery availing loan, then such machinery is termed as primary security.

   Collateral or additional security may be insurance policies, shares, land, building, etc. These loans are called secured loans. Loans without security are named unsecured or clean loans. The interest rates for secured loans are....