BANKING AFFAIRS

Detailed explanation-1: -A lender is a financial institution that lends money to a corporate or an individual borrower with the expectation that the money will be repaid at a later date. Lenders require borrowers to pay interest on the amount borrowed, usually charged at a specific percentage of the total amount of loan.

Detailed explanation-2: -In direct finance (the route at the bottom of Figure 1), borrowers borrow funds directly from lenders in financial markets by selling them securities (also called financial instruments), which are claims on the borrower’s future income or assets.

Detailed explanation-3: -They work as an intermediary between the savers and the investors by mobilising funds between them.