MODES OF BORROWING

Running Finance:

It is an unsecured financing product issued by a financial institution to its

customers on daily basis in order to meet their daily needs.

It is a finance offerings by financial institutions against mortgages and a

credit facility established for a specific time limit at variable interest rates.

BANK OVERDRAFT:

An overdraft is a loan arrangement between the borrower and the bank

whereby the bank extends the credit to a maximum amount against which
the customer can write cheque or make withdrawals.

It is the amount of money borrowed that exceeds the deposits.

An overdraft occurs when money is withdrawn from a bank account and the
available balance goes below zero. So, such facility offered by a bank is called
bank overdraft.

CASH CREDIT

It is a short term cash loan to a company. A bank provides this type of

funding but only after the required security is given to secure the loan.

Once the security has been given, the business that receives the loan can
continuously drawn from the bank upto a certain specified amount.

LOAN AGAINST PLEDGE

A delivery of personal property to a creditor as security for a debt or

for the performance of an act.

Pledge is also called as pawn or security interest, is a piece of property used

to secure financing.

It is any physical thing with liquid value. Thus the loan taken against pledge is
called as loan against pledge.

HYPOTHECATOION

Hypothecation means the pledge of a property as security or collateral

for a debt.

Generally physical transfer or transfer of titles does not take place in

hypothecation.

Collateralizing arrangement in which neither the possession nor the title but
only the right to sell an asset or property passes on to the creditor or lender
(called a grantee). Arrangement where the grantee has the possession and
right to sell, but not the title, is called pledging.

MORTGAGE

It is a transfer of interest in specific immovable property.

It is a type of charge related to immovable property.

A security interest in a piece of real property, in exchange for the extension of

loan.

A loan to finance the purchase of real estate, usually with specified payment
periods and interest rates. The borrower (mortgagor) gives the lender
(mortgagee) a lien on the property as collateral for the loan.

A debt instrument, secured by the security of specified real estate property,

that the borrower is obliged to pay back with a predetermined set of
payments.

Mortgages are used by individuals and businesses to make large real estate
purchases without paying the entire value of the purchase up front.

Over a period of many years, the borrower repays the loan, plus interest, until
he/she eventually owns the property free and clear.

DISCOUNTING COMMECIAL PAPERS

An unsecured short-term debt instrument issued by a corporation, typically

for the financing of account receivable, inventories and meeting short-term
liabilities.

Maturities on commercial paper rarely range any longer than 270 days. The
debt is usually issued at discount, reflecting prevailing market interest rates.

PUBLIC DEPOSITS

It refers to the deposits that are attained by the numerous

large and small firms from the public.

It is a source of fund for private and non-banking companies. The

interest on these deposits is more than the interest given by banks.
Public Deposit refers to the money received by a company through
deposit or loan collected from public, excluding the money received
in the form of shares and debentures.

Loan against Mortgage

It is a transfer of interest in specific immovable property. It is a type

of charge related to immovable property. A security interest in
apiece of real property, in exchange for the extension of loan. Loan
against such property is called as loan against mortgage.

LOAN FROM DFI

It occupy the space between public and private investment.

The are financial institution which provide finance to the private

sector for investment that promote development.

They are owned by the Governments of one or more developed

countries.