BNK601 - Banking Laws & Practices

@zaasmi said in BNK601 Quiz 1 Solution and Discussion: The strong financial system helps in ---------- the spread between banks lending and borrowing rate. Spreads in Lending For any business that lends money, the interest rate spread is what the company charges on a loan compared to its cost of money. A bank runs on interest rate spreads, paying a certain rate on savings and CD deposits and making loans at higher rates than it pays to savers.

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Question No. 1: Term: duration of product and services offered by Bank are known as Term. There are two type of term in banking system are as follows: Short term: short-term lending options are paid back over a period of months or as little as two years. Short-term business financing options are for smaller amounts. Because short-term financing is for smaller amounts, you pay them back more quickly at a higher interest rate and there’s a shorter approval process. Long Term: long-term lending options are paid back over a number of years. Long-term financing options are for larger amounts. Long-term business financing options are for larger amounts, there’s a longer, more rigorous approval process and it takes more time to pay them back. Demand Liabilities: Demand Liabilities are those liabilities which are to be paid as and when demanded. Example: deposit in saving and current accounts are demand liabilities. Bank has to pay then as and when demanded. Question No 2: (Different Financing Facilities) The different financing Facilities provide by the banking system are as follows: Business Lines of Credit Overdraft Services Deferred payment plans Lines of credit Revolving credit Term loans Letters of credit Swing line loans Business lone Loan for Capital Lone for Agriculture Production etc. Question No 3: (Locker Facility) Yes our bank is provided Locker facility to the customer to safe or secures their Documents’ and value able things.