Banks do not have money in order to be stored or frozen, but they are looking for and collected for use in bridging the financing needs of potential customers. And so, it can be said that the most important aspects of the uses of money by the banking system but is to be used in the granting of loans to those who need Alleha.o loans represent in fact the main activity of banks and end of existence. Meaning not in fact for these deposits and the funds collected by banks unless employs one way or another in bridging the funding needs of economists for clients who are in need of it.
Types of loans:
1. loan Season:
Seasonal loans are a special type of bank loans. And arise when the Bank is financing a seasonal activity for its customers. Many of the institutions irregular activities and is running along the exploitation cycle. But that the production cycle or seasonal sales cycle. An institution conducts expenses during a certain period during which gets production, and sell this production especially in the period Among the examples of these production activities and sale of school supplies and operations as well as the production and sale of agricultural crops. Extending the production period and get sales in a given period as a time of school entry for school supplies and the post-harvest for agricultural crops.
The loans granted by the bank to the customer to fund the costs of raw materials and other expenses associated with the production process called seasonal loans. And if the loan is used to meet the Treasury resulting from this seasonal activity of the customer’s needs. And It should be noted that the bank does not financed all costs. And since the seasonal activity can not exceed the exploitation of one cycle (civil year), this type of loan can be granted if for a period of usually extends up to nine months.
But before embarking on granting this type of loan, the customer demands to submit to the scheme to finance the bank shows the time-activity expenses and revenues, and on the basis of this scheme the bank making the loan. And a customer during the discharge of production to pay this loan in accordance with the scheme subject of consumption in advance.
2. linkage loans:
It is a loan granted to the customer to meet the need for liquidity needed to finance the financial process often achieved almost certain, but he deferred all external causes.
And Bank decides to like this type of loan when there is almost sure to check the process of funding the place, but there are only certain reasons have delayed realization. And it can understand more the nature of this type of loan over the following three examples:
Example 1 – The Foundation investment process and got funding from specialized financial institution. But for certain reasons related to the guarantees and possibly other studies make the implementation of this process can not be achieved in the case. In this case the institution resorts to her bank asking him to finance the operation (for a short period of course) pending the specialized financial institution to edit this loan, where the bank recover his money.
Example 2 – to expand the Energy Foundation, the Governing Council decided to fund it by resorting to the issuance of new shares or bonds. But waiting for the entry of funds resulting from this version will be lost precious time and opportunities for the institution. To avoid this, the latter resorting to the bank to ask him a loan to finance this expansion and wait until the entry of the funds, which is only a matter of time.
Example 3 – to do a certain investment, the Foundation decided to fund it, do you think it is to sell real estate is in need. But the entry of funds resulting from this waiver relatively delayed due to actions that need to be made. So turn this institution, waiting for the entry of these funds, to the bank to apply for a loan in order to finance this investment, and are paid after these funds, which will not be long.
And all these three types within the range connectivity loans. And it is aimed at achieving the opportunities available to the institution pending verification of financial operation, which is considered almost certain. In spite of that, there are risks associated with this type of loan, such as the risk of not check the process to repeal or to review them for other reasons, and there are risks arising from the use of loans and financial operation for purposes other than use in repayment of the loan.
And since he has a bank of experience and study possibilities, it can hire it in the direction of reducing to a large extent of these risks, and do not tell repeal because it does not exist for the loan without the risk of whatever study possibilities available to banks and whatever the degree of confidence in customers and loyalty to their commitments.