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Describe advantages and limitations of loans from financial institutions |
| Answer» 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:\xa0Financial Institution provide long term finance which is not provided by Commercial Bank.2. Managerial Advice:\xa0They provide financial, managerial and technical advice to business firm.3. Easy installments:\xa0Loan can be made in easy installments. It does not prove to be much of a burden on business.4. Easy availibility:\xa0The 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. | |