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Explain loan.............. |
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Answer» ★ Loan is a thing that is borrowed, especially a sum of money that is expected to be paid BACK with interest. ★ Banks provide loans to people at some interest RATE. ★ Banks keep only 15% of their total deposits as cash to meet the day-to-day withdrawal demands. ★ Rest of the cash is extended as loans to those who need it (borrowers) at a specific rate of interest. ★ The interest provided by banks to depositors is less than the interest charged by banks from borrowers on loans. ★ This difference is the main source of income of banks. ★ Banks provide housing loans, vehicle loans, farm loans, education loans, personal loans etc. to meet the specific requirements of borrowers. ★ Debt TRAP: It is a situation in which a person is caught in the VICIOUS cycle of debts. He/she takes loans for meeting his/her requirements and on being unable to pay back the loan, takes a FRESH loan to repay the old loan. This leaves him/her indebted all through his/her life. |
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