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Lending may mean to grant to someone the use of something on the basis

that it will be returned. In correlation to banking sector or business lending


refers to provision of money on
the condition that the amount given
should have a fixed term and interest charged for that fixed
term before being
returned.
Essence means the core nature or most important quality of something or thing. So
from both definitions provide an insight or a way to understand the question by
analyzing the key concepts independently. The aim of the question is trying to find
out why lending is the core feature or activity
of banks in banking business.
Lending is useful tool in multiplying the banks deposits or funds:banks are institutions for mobilizing funds from their customers for safekeeping until
when they are needed again. When banks receive that money they invest them by
lending them to people are in need of them for different purposes. Those people are
instructed to repay them in a fixed term and agreeable interest rate through that
multiplier effect takes place and the process goes on by generating more funds to
banks and their customers.
Lending is a tool to finance the administration expenses of banks:-the
only large source of revenue for banks to rely on is through lending activities or
process. The profit from lending is used for administration expenses and other
operating costs for running the banks. Also the profit from lending can be used for
expansion and a constructive activity hence makes lending an important component
for bank existence.
Lending is a strategy for potential customers attraction:-lending can be
used as a marketing strategy for attracting potential customers such as
businessmen who need more funds for their business and other reputable
organization who need funds for external financing. Those banks which offer large
sums of cash for lending are more liked by customers than those who are having
complicated procedures and offer small funds for lending. Lending is a tool for
boosting banks customers business hence is important quality for mobilization of
customers funds.
Lending is a method of stabilizing the value of customers fund:-banks
get money to lend and for other purposes from customers who deposit their money
for safe keeping. The customers needs assurance from banks if their money or
funds deposited is safe and of the same amount of value invested. Due to lending
process banks maintain the value of customers fund by using the profit from lending
activities and give interest to those customers who they keep their funds, through
this strategy the value of money mobilized is maintained or stabilized against
passage of time and banks can invest the money more and more at different
periods of time.

Thus the process of lending to banks is a basic fundamental activity and leads
to banking operation smoothness. The foremost thing is that its indispensable
meaning banks cannot exist without lending process.

REFFERENCE
Banking and finance institution act(2006)

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