Write a note on loans and interests.
Answer:
Banks act as a mediator between those who have surplus funds (the depositors) and those who are in need of funds (the borrowers) by lending money to people who are in need.
People can open accounts in banks and banks make use of that money to fulfil the loan requirements of needy people.
A higher rate of interest is charged for the borrower and that profit is given to the depositor as interest for offering deposits. This is the actual loan process.
Loan interest
The amount charged by a lender to a borrower for any type of debt is referred to as an interest rate, which is usually represented as a percentage of the principal. The asset borrowed can be cash, a significant asset such as a car or a house, or just consumer products. The interest rate is frequently referred to as the lease rate in the case of larger assets.