DIFFERENT TYPES

OF
LOANS AND
ADVANCES
 PRESENTED
BY:

DIVYA JAIN
INSIYA DHANKOT
JYOTI GOKLANI
HEERAL SHAH
VINAL SHAH
 Loans & Advances:

A loan is a type of debt. Like all debt

instruments, a loan entails the redistribution of
financial assets over time, between the lender
and the borrower.
In a loan, the borrower initially receives or
borrows an amount of money, called the
principal, from the lender, and is obligated to
pay back or repay an equal amount of money
to the lender at a later time. Typically, the
money is paid back in regular installments, or
partial repayments; in an annuity, each
installment is the same amount.
 Types of Loans
1. Secured
2. Unsecured
Secured:
 A secured loan is a loan in which the borrower
pledges some asset (e.g. a car or property) as
collateral for the loan.
 A mortgage loan is a very common type of
debt instrument, used by many individuals to
purchase housing. In this arrangement, the
money is used to purchase the property.
 A type of loan especially used in limited
partnership agreements is the recourse note.
 UNSECURED LOANS
UNSECURED LOANS

 Unsecured loans are monetary loans that are

not secured against the borrower's assets.
These may be available from financial
institutions under many different guises or
marketing packages:
 credit card debt
 personal loans
 bank overdrafts
 credit facilities or lines of credit
 corporate bonds
 DEMAND LOANS
 Demand loans are short term loans
that are atypical in that they do not
have fixed dates for repayment and
carry a floating interest rate which
varies according to the prime rate.
They can be "called" for repayment
by the lending institution at any
time. Demand loans may be
unsecured or secured.
 SUBSIDIZED LOANS
A subsidized loan is a loan on which the
interest is reduced by an explicit or hidden
subsidy. In the context of college loans in the
United States, it refers to a loan on which no
interest is accrued while a student remains
enrolled in education.[Otherwise, it may refer
to a loan on which an artificially low rate of
interest (or none at all) is charged to the
borrower.
 An unsubsidized loan is a loan that gains
interest at a market rate from the date of
disbursement
 TERM LOANS
Term Loan is normally extended for acquisition of Land,
Building and machinery, purchase of vehicles etc. and also
along with working capital finance as composite loans.
        Term Loan is given both for industrial and non-
industrial borrowers i.e. both for projects / activities
involved in manufacture/processing/repairing and business /
trading activities etc. The project needs to establish
technical feasibility and economic viability.
Rate of interest on term loans depend upon various factors
like nature of the project, quantum of loan, risk rating,
repayment period and structure of the debt. Securities for
term loans per se would be as per general lending norms of
the banks.
 Bank Loans
 Bank Loans are offered to the customers to
fulfill their monetary requirements. The various
types loans, which are offered to the
customers include:

 Personal Loan
 Home Loan
 Consumer Loan
 Vehicle Loan
 Educational Loan
 Credit Cards Facilities
 Agricultural Loan
Other products of loans
 Agriculture & Rural Credit
 Kisan Credit Card
 Loans for Agri- Clinic
 Minor Irrigation Loans
 Farm Machinery Loans
 Farm Development Loans
 Vehicle Loan for Agriculturists
 Loan for Plantation Crops
 Loan for Marine Fisheries
 Loan for Inland Fisheries
 Loan for Sericulture
 Cont.
 Loan for Purchasing
Agricultural Land
 Loan for Poultry
 Export Credit for Agro Products
 Other Agricultural Loans
 Loans to Small Scale Industries
 Loans to Heavy Industries
 Loans to self employed persons
 PERSONAL LOANS
A personal loan, also called a
signature loan, is an unsecured loan
granted for personal use. This is
usually used for meeting expenses
like home improvement, medical
emergencies or major domestic
purchases. You can get a personal
loan in the range of Rs.50,000 to
Rs.20,00,000. The repayment period
usually varies from 1 to 5years.
 HOME LOANS
Home loans are loans that
are taken for the purpose
of buying a house. Home
loans are secured loans.
The house acts as a
collateral or security to the
loan.
 STUDENTS LOANS
A student loan is designed to help
students pay for university tuition,
books, and living expenses. It may
differ from other types of loans in that
the interest rate may be substantially
lower and the repayment schedule may
be deferred while the student is still in
education. It also differs in many
countries in the strict laws regulating
renegotiating and bankruptcy.
 AGRICULTURE LOANS
 Applicants must be family-sized farmers,
who are denied credit by private and
cooperative sources, and have reasonable
prospects for success in the farm
operation. Farm loans are made to farmers
to help them pay their operating expenses
for such productions costs as feed, seed,
fertilizer, and pesticides, and to meet
other essential operating expenses. The
scheduled repayment is usually over 1 to 7
years depending on loan purposes.
 OVERDRAFTS
A bank overdraft is when someone
is able to spend more than what is
actually in their bank account.
Obviously the money doesn't
belong to them but belongs to the
bank so this money will need to be
paid back; normally automatically
done when money goes into the
persons account.
 CASH CREDIT
A cash credit is essentially a drawing
account against credit granted by the bank
and is operated in the same way as a current
account in which an overdraft limit has been
sanctioned. The principal advantages of a
cash credit account to a borrower are that,
unlike the party borrowing on a fixed loan
basis, he may operate the account within the
stipulated limit as and when required and can
save interest by reducing the debit balance
whenever he is in a position to do so.
 BILLS DISCOUNTED
A debt security issued at a
discount to its face value. For
example, if a discounted bill has a
face value of $1,000, it may be
issued to the holder at $900.
When it matures, the holder
receives the full $1,000.