Considering factors / Principles of Granting Loan/Bank Loan/Advances.

Bank directs its own business with the money of other peoples. After meeting customers demand the remainders are given to the general people as loan. But if the loan money are not got back at appropriate time, bank becomes failure to pay the instant demand of depositors and its goodwill is lessened. So, to ensure the instant demand of money the banks are to consider following many facts or principles before giving loans to peoples :

1.Solvency :

Bank is to see whether the expected lonee is financially solvent or not. if he is solvent then bank may give him lone.

2. safety :

While contributing the fund, banks are to be alerts in light of the fact that bank's cash is depositors money. Unless the cash loaned out is safe, the banks can't pay depositors money back. Therefore, the banks are considering extreme truly the parts of security of the loaned out money .

3. Profitability: 

The main impetus of commercial  endeavour is to produce benefit. So, it is valid if there should arise an incident  of bank.

4. liquidity: 

Deposits  are the life blood of a bank. Investors are repayable on interest or after expiry of a certain period. Everyday  investors either store or withdraw money. To fulfill the demand for cash, all banks need to keep certain measure of trade in for spendable dough their custody.

5. Honesty of Client :

Banks are to think whether the loan given to the person is completely  honest or not. If not, then bank don't give him any lone. Because every honest man is always honest to all sides.

6. Utilization of loan amount :

While giving loan all banks have to keep sight on whether the person is taking loan will be properly utilized in any productive area with which the amount may be come back or for personal demand. If it's possible to use for personal or family demand, then bank won't disburse him any loan.

7. Purpose of using :

Bank don't give lone for any purpose. So, before disbursing loan bank is to know in which purpose loan is being taken by client.

8. National Interest :

Generally Bank should not disburse loan in known condition if the amount is used against national interest.

9. Nature of security :

Bank provides lone easily against security which is more valuable and easily convertible in cash.

10. Term of returning :

Commercial bank can give loan more if the loan come back in short while. This is why bank has to remember the duration of paying the loan while disbursing loan

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11. Loan Specialization / Diversification  :

Selecting the specific area or sector of loan giving bank provides lone. If people wants to take loan on specified sector, bank give preference or priority to that people. Because the more loan sectors, the bank can provide more loans.

12. Volume of loan :

Bank has to consider the expected amount of loan or volume of loan. Because it is impossible for bank to disburse more amount than predetermined amount by the authority of bank or central bank.

13. Principles of Central Bank :

Following the principles, guidelines and directions of central bank,  the commercial bank has to give loan.

14. Principles of government :

Following the principles, guidelines and directions of loan providing system of government,  the commercial bank has to diverse loan.

At last it is said that, bank gives loan from the amount of clients. so bank has to disburse loan with goodwill for achieving profit thinking the total safety & security of finance.