Describe advantages and limitations of loans …
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Gaurav Seth 5 years, 2 months ago
FINANCIAL INSTITUTION:
The state and central government have established many financial institutions to provide finance to companies. They are called development Bank. These are IFCI, ICICI, IDBI, LIC and UTI. etc.
MERITS:
1. Long term Finance: Financial Institution provide long term finance which is not provided by Commercial Bank.
2. Managerial Advice: They provide financial, managerial and technical advice to business firm.
3. Easy installments: Loan can be made in easy installments. It does not prove to be much of a burden on business.
4. Easy availibility: The funds are made available even during periods of depression.
LIMITATIONS/ DEMERITS:
1. More time Consuming: The procedure for granting loan is time consuming due to rigid criteria and many formalities.
2. Restrictions: Financial Institution place restrictions on the company’s board of Directors.
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