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What is basic concept to concessional loan to bank employee?

Ramon Kelly

in Student Loans

1 answer

1 answer

Ashley Howard on June 3, 2018

Banks usually offer loans at a concessional rate of interest to their employees. This is a benefit that the bank offers to its employees.

Generally, if a bank charges 10% rate of interest to a normal customer and 7% to its employee as a concessional rate, what happens is that the 7% is the minimum interest that the bank has to collect from the person to maintain a balance between their lending and deposit rates and the remaining 3% is the profit that the bank would be willing to give up for the fact that, the borrower is an employee of the bank and that the bank is willing to lose the interest with the purpose of provide this benefit to their employees.

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