Advancing of loans

The second important function of the bank is advancing of loans to the public.After keeping certain reserves,the bank lend their deposits to the needy borrowers.Before advancing loans ,the banks satisfied themselves about the credit worthyness of the borrowers .The following are the various types of loans that are granted by the bank .
->Money At Call
->Cash credit
->Overdraft
->Discounting hte bills of exchange
->Term Loans
->Personal Loans
->Credit Cards
Money at Call : These loans are very short period loans and can be called back by hte bank at a very short period that may be from one day to fourteen days.These loans are generallly made to other banks (or) financial institution (or) dealers (or) brokers of stock exchange.
Cash Credit : These loans are given to the borrowers against their current assets such as shares,stocks,bonds etc... The bank opens the account in the name of borrower and allows them to withdraw borrowed money from time to time.Interest is charged only on the amount actually withdrawn from the account.
OverDraft : Sometimes the bank provides overdraft facilities to its customer through which they are allowed to withdraw more than their deposits.interest is charged from the customers on the withdrawn amount.
Discounting the bills of exchange : This is one of the popular types of lending by the modern banks.Through this methos a holder of a bills of exchange can get it discounted by the bank.
In a bills of exchange the debtor accepts the bill drawn upon him by hte creditor and agree to pay the amount mentioned on maturity.After making some marginal deductions the bank pays the value of bill to the holdeer when hte bills of exchange matures .The bank get its payment from the party which had accepted the bill.
Term Loans : The Banks have also started advancing medium term loans and long term loans.The maturity period for such loans is more than 1 year .the amount sanctioned is either paid or credited to the amount of borrower.The interest is charged on the entire amount of the loan and the loan is paid either on maturity (or) in installments.Loans are given for the construction of houses,purchase of flats etc...
Personal Loans : These loans are given to the salaried employees to buy customer durables like scooter,T.V,refrigerators, houses and flats etc... the loan amount is recovered in instalments from out of the salries.The personal loans also provide education loans to the students to pursue higher studies.
Credit Cards : Now a days all banks are issuing Credit Cards to individuals inoreder to enable them to buy goods without carrying cash.The bill or voucher for hte goods purchased is sent by the vendor to the banker.The credit card facilities is made available for specified amounts. Credit Cards are accepting in hotels,travel agencies,cloth showrooms,petrol pumps etc...