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Banks as a credit union provides bank loans. It offers credit to the needy for a specific time period at a specific interest rates. The person who borrows the money will have to make time payments along with the interest & repay the loan. Also, one can make prepayment of the loan & get some discount in loan amount to be repaid. By providing finance for various purposes such as purchase of house, car, business purpose etc, the bank earns in the form of interest. Bank loans are also known as institutional credit since bank is an institution and it competes with the money lenders from the unorganised segment for giving advance.
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