What is Corporate Financing?

Important banking qna for banking aspirants, which is helpful in banking exam.

What is Corporate Financing?

  • Advances to business enterprises can be in the form of term loans, the term depending upon the type of asset being financed, revolving credit through overdrafts or cash credit for working capital requirements of the business entity.
  • Term loans are primarily for capital investments in business like acquisition of immovable property, plant and machinery etc.
  • Cash credit accounts indicate continuously available finance facility to be used as per requirements up to a pre-determined limit, which will have transactions relating to both payments and receipts of an enterprise.
  • Overdrafts generally suggest short-term accommodation through a credit facility which is deemed necessary in view of sudden requirements of a business.
  • Another form of credit facility extended to corporates is against transfer of title of negotiable instruments like cheques and documentary bills of exchange.

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