Commerce

Collateral security offered. Customer’s referee. Period of repayment. The earning power of the borrower. Amount involved, The type of account operated by the customer. The customer’s financial transactions with the bank.

LOANS are credit facilities granted by banks to their customers that meet the requirements. Loans are usually short or long- term depending on the agreement reached by the bank and its prospective customer. Banks usually charge interest on loans, and also demand for collateral securities before any loan is issued.

OVERDRAFTS are short-term credit (ranging from 3 to 6 months or at most one year), which is granted by commercial banks to their credit-worthy customers who run a current account with them. Overdraft is when a bank allows a customer with a current account to withdraw more than what he has in his account usually …

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It reduces the burden of carrying a huge amount of money. It guarantees safety of the money either payments or otherwise. It facilitates business transaction Cheque makes payment easy and convenient It serves as a receipt since money through a cheque can never be denied.

Irregular signature Unconfirmed alterations. No enough money in the customer’s account to cover the amount to be withdrawn. An expired cheque, a cheque that has stayed for more than six months. If the account is closed, If the bank has stopped payment. Frozen account. If an account does not exist. Death of the drawer.

The drawee: This is the bank that effects the payment on behalf of the drawer. The drawer: This is the person that issues or writes a cheque and whose current account is debited. Payee: This is the person whom the payment is made to at the bank.