What is Credit or a Loan?
A credit or a loan can be simply referred to as a certain amount of money borrowed by a bank or any other financial institution. The borrowed amount must be returned by the borrower to the bank along with the application within a specified timeline. If a person/institution fails to do so, the banks have the right to acquire and sell the collateral kept as the security of the loan.
Terms of Credit – Class 10 Economics
The economy runs with a proper cash flow in the market, and the banks maintain this cash flow by lending loans to people and institutions. However, as there is a variety of loans that banks offer, similarly every loan has its special terms and conditions.
Terms of Credit
Loan and credit help the economy move forward as it leads to development, thus leading to economic growth. However, in some cases, some loan becomes bad loan (when the borrower is not able to repay the loan). Thus the GOI and RBI have issued some strict guidelines for the issuance of the loan, based on which the credit is offered in India. The loan and terms of credit are discussed in detail below in this article.