Discuss the various forms of bank credit. (Bangladesh)

Bank is an institution which is engaged in the business of money and loan. The more loans a bank can provide the better and beneficial for the bank it will be. Loans can be of different types according to users, term and security. The types of loans are discussed below which are available in the Bangladesh:

Classification on the basis of Users:

A. Individual Loan:

    i.   Consumer Loan Banks provide loans for durable goods/ appliances and commodities like- loans for TV, Freeze, Computer, Car, Furniture etc.

    ii.  Housing Loans This is given to the fixed or low income people for housing purposes. This loan is usually intermediate and/or long term.

    iii. Education/ Medical and Other Loan  Some of the banks also provide loans to the people of the society in order to meet their educational or medical neeeds after being sure about the repayment.

B. Industry Loan:

    i.   Working Capital Loan This type of loan is given to the business/industry to provide capital required for purchasing raw materials, paying wages and fuel expenses etc.

    ii.  Fixed Capital Loan Huge amount of capital is required for procurement and replacement of mechinery/equipments for the industrial organizations.

C. Loan for Business Persons:

    i.   Working Capital Loan For maintaining day to day transactions businessmen need working capital. This problem is solved by the provision of loan.

    ii.  Export/Import Loan Banks also help the export-import firm by issuing Letter of Credit (LC), Bills of Exchange (BOE), etc.

D. Loans for Farmers:

    i.   Crop Loan  Banks provide loans to farmers to buy seeds ,cows and fertilizers.

    ii.  Non-crop Loan Farmers also need money for poultry, fisheries, agro-business etc. In this case socialized or commercial banks provide Small and Medium Enterprise (SME) loan to the farmers.

    iii. Farming Equipment Loan To purchase farming equipments banks also provide loans to farmers.

E. Loans for Landless people:

    i.   Small Business Loans Banks provide loans to the landless people to establishing income generating small business.

    ii.  Housing Loan Banks may provide loans to landless for housing purposes.

    iii. Medical Loan Loans may be given to landless people also for medical purposes.

Classification on the basis of Terms:

A. Short Term Loans: These loans are sanctioned for less that one year. These can be of two types as follows:-

    a. Loans provided for immidiate use and payable on demand,

    b. Loans payable on short notice.

B. Midium Term Loan: Loans with the maturity of one to five years are called mid-term loans. 

C. Long Term Loans: Loans with the maturity of more that five years are long-term loans. 

Classification on the basis of Security:

A. Unsecured Loan: Loans those are provided without any collateral usually for poor clients or reputed persons. 

B. Fully secured loan: If the loan is given by taking a security or collateral of the amount exceeding the amount of loan or just equal to the amount of loan, it is called  "fully secured loan" .

C. Partly secured loan: If the amount of loan is not fully secured, rather partial amount of collateral is provided to acover the lan sanctioned; it is called "Partly secured loan".

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