1.

How is cash credit different from a loan?

Answer»

a) In case of a loan, a specified amount is sanctioned by the bank which the borrower may withdraw in Lumpsum or by cheques against the sum. In case of cash credit, the bank places the specified amount to the credit of the borrower, the borrower draws the money as and when required. 

(b) Interest on the loan is charged on the full amount used or not used. Interest on cash credit is charged only on the amount actually used by the borrower.



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