Loans in India

Loans in India


                               Loans in India


Loan is an amount of money that you borrow from a Bank, financial institution or any relative and you return the money with interest. Here the people have to pay interest per month apart from its principal. In this Post , We will describe terms, types and nature of Loans in India.

 Ancient History

Long ago, the Modern Banking and Loan system was designed by our Ancient Guru. The literature about loan is often called Debt which  is found in  Manusmriti , Bhagavad Geeta  and Kautilya’s Arthashastra. 

The usury has been described in our Hindu text “The Sacred Laws of the Aryas”.For eg: Rishi Vashistha prohibits the higher castes of Brahmnas (Priest) and Kshatriya (warriors) from being usurers.

Kautilya is the most prominent  Political Economist  during the Mauryan Empire. He covers detailed references on creditors, lenders, lending rates and the existence of professional banking in India. In the Mauryan period, there is a term called “Adesha” for the financial instrument. Rate of Interest is described in “Arthashastra” for different types of borrowers.



The first bank to crop up was the Union Bank of Calcutta during the British rule. Similarly, Allahabad Bank was established in 1865 and is still functioning. We saw the establishment of banks inspired by Swadeshi movement between 1906 and 1911.

Some of the banks during that period are The South Indian Bank, Bank of India, Corporation Bank, Bank of Baroda, Canara Bank and Central Bank of India.



Some major changes were done in the economic affairs of the country after independence. Thus, the Reserve Bank of India  and The Banking Regulation Act 1949 was introduced which empowered the RBI to regulate and control Indian Banks. All the interest rate of the loan given by the Bank is regulated by the Bank.

During the 1990s, when India opened up the Market for Global Outreach, several other banks like ICICI Bank, HDFC Bank and IndusInd were established. With the Introduction of  FDI and Modern Technologies, now a person can take money (Loan) and transact in any parts of India.


Terms used in Loan

Loan is basically described by the terms.


This is also called Deposit. The down-payment is an amount of money that a person has to pay as the first contribution towards clearing the debt. It is basically a percentage of the total loan amount.


A monthly amount of money which is paid.


Surcharge  apart from the loan amount that is principal. The interest varies from loan to loan and from lender to lender.


Types of Loan

Loans, Personal Loan, Education Loan, Home Loan

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