ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -Various types of loans given by a commercial bank are business loans, car loans, house loans, personal loans, and education loans. They give out these loans from the money deposited by their customers in different types of accounts. They use the deposits as capital for providing loans.

Detailed explanation-2: -Commercial bank money consists mainly of deposit balances that can be transferred either by means of paper orders (e.g., checks) or electronically (e.g., debit cards, wire transfers, and Internet payments).

Detailed explanation-3: -For example, one type of secured commercial loan is a mortgage on a building. The borrower pledges the building as collateral to the lender to make the loan payments. The borrower has an option to repay or refinance during the term of the loan.

Detailed explanation-4: -A commercial loan is done between a bank and a business, used to fund operating costs and capital expenditures. Many commercial loans require collateral, such as property or equipment. Companies generally have to provide financial statements to prove their ability to repay.

Detailed explanation-5: -Commercial banks are of three types i.e., Public sector banks, Private sector banks and Foreign banks.