Question

Distinguish between:
1. Call loans and long term loans
2. Current account and saving account
3. Cash credit and overdraft facility

Answer 1

1.

Basis	Call loans	Long term loans
Time-period	They are provided for a period of 7-15 days.	They are provided for a period of more than 5 years.
Interest rate charged	They charge lowest interest rates.	They charge highest interest rates.
Users	They are mostly availed to by bill-brokers and stock brokers.	They are mostly availed by big private companies and PSU companies.
Recall of loan	These loans can be recalled by the banks at any time from the borrower.	These loans can be recalled only after giving a prior notice to the borrower.

2.

Basis	Current account	Savings account
Definition	Current accounts are those accounts which facilitate their consumers to carry out day to day transactions.	Savings accounts encourage their consumers to save.
Interest rate offered	These accounts offer minimal interest rates or no interest.	These accounts offer comparatively higher interest rates.
Users	They are mostly created by big companies, businessmen, traders etc.	They are mostly created by the salary class, farmers etc.
Overdraft facility	This facility is available for a current account.	This facility is not available for a savings account.

3.

Bases	Cash credit	Overdraft facility
Definition	A loan taken in the form of cash by anyone from the bank against some securities is called cash credit.	Commercial banks allow their customers to withdraw an amount from the bank in excess of their balance.
Drawers	Anyone can take a cash loan from banks against some securities.	Only current account holders can avail this facility.
Interest rate charged	They charge higher rates of interest against a cash loan.	They charge minimal rates of interest against an overdraft.