ENTREPRENEURSHIP

Detailed explanation-1: -What exactly is a ‘Haircut’ in banking? When a bank takes a ‘haircut’, it means it accepts less than what was due in a particular loan account. Example: if a bank was owed Rs 10, 000 by a borrower and it agrees to take back only Rs 8, 000, it takes a 20% haircut.

Detailed explanation-2: -A haircut is the difference between the initial market value of an asset and the purchase price paid for that asset at the start of a repo. An initial margin is analogous in function to a haircut. The difference between the two is merely a matter of expression.