No products in the cart.

Describe the advantages and limitations of …

CBSE, JEE, NEET, CUET

CBSE, JEE, NEET, CUET

Question Bank, Mock Tests, Exam Papers

NCERT Solutions, Sample Papers, Notes, Videos

Describe the advantages and limitations of loans from financial institutions
  • 2 answers

Yogita Ingle 3 years, 5 months ago

 

Merits are as :
1. Financial institutions provide long-term finance, which are not provided by commercial banks.
2. Obtaining loan from financial institutions increases the goodwill of the borrowing company in the capital market. Consequently, such a company can raise funds easily from other sources as well.

3. Besides providing funds, many of the institutions provide financial, managerial and technical advice and consultancy to business firms.

4. As repayment of loan can be made in easy installments, it does not prove to be much of a burden on the business; and

5. The funds are made available even during the periods of depression, when other sources of finance are not available.

Limitations are :

1. Financial institutions are follows rigid criteria for grant of loans. Too many formalities make the procedure time-consuming and expensive.

2. Certain restrictions such as restriction on dividend payment are imposed on the powers of the borrowing company by the financial institutions.

3. Financial institutions may have their nominees on the Board of Director’s of the borrowing company there by restricting the powers of the company.

Gaurav Seth 3 years, 5 months ago

Merits are as :

 

1. Financial institutions provide long-term finance, which are not provided by commercial banks.

2. Obtaining loan from financial institutions increases the goodwill of the borrowing company in the capital market. Consequently, such a company can raise funds easily from other sources as well.

3. Besides providing funds, many of the institutions provide financial, managerial and technical advice and consultancy to business firms.

4. As repayment of loan can be made in easy installments, it does not prove to be much of a burden on the business; and

5. The funds are made available even during the periods of depression, when other sources of finance are not available.

Limitations are :

1. Financial institutions are follows rigid criteria for grant of loans. Too many formalities make the procedure time-consuming and expensive.

2. Certain restrictions such as restriction on dividend payment are imposed on the powers of the borrowing company by the financial institutions.

3. Financial institutions may have their nominees on the Board of Director’s of the borrowing company there by restricting the powers of the company.

http://mycbseguide.com/examin8/

Related Questions

What is pre shipment finance
  • 1 answers

myCBSEguide App

myCBSEguide

Trusted by 1 Crore+ Students

Test Generator

Test Generator

Create papers online. It's FREE.

CUET Mock Tests

CUET Mock Tests

75,000+ questions to practice only on myCBSEguide app

Download myCBSEguide App