A loan is an amount of money that is borrowed, often from a bank, and has to be paid back, usually together with an extra amount of money that you have to pay as a charge for borrowing. The principal is the amount you borrowed, and the interest is the amount charged for receiving the loan. Since lenders are taking a risk that you may not repay the loan, they have to offset that risk by charging a fee – known as interest. Loans typically are secured or unsecured. A secured loan involves pledging an asset as collateral for the loan. If the borrower defaults, or doesn’t pay back the loan, the lender takes possession of the asset. An unsecured loan option is preferred, but not as common. If the borrower doesn’t pay back the unsecured loan, the lender doesn’t have the right to take anything in return.
Loans allow for growth in the overall money supply in an economy and open up competition by lending to new businesses. Loans also help existing companies expand their operations.
For the financial and socio-economic welfare, Shikhardeep Multipurpose Co-operative Ltd. has the provision of loan at affordable interest rate to the members, abiding the principles, norms and values of organization. The loan facility can be provided if the member has completed the membership period of three months in the organization.
