What is Loans and Borrowings?
Loans are financial assets. This asset is created when a creditor (saver) lends
funds directly to a debtor (borrower). There will be an evidence of a non-negotiable document for the creation of the asset.
Loans can be classified further into short term loans, medium term loans and long term loans.
- Short term loan :- Loans with maturity of one year or less.
- Medium term loan :- Loans with maturity from 1 to 5 years.
- Long term loan :- Loans with maturity of more than 5 years.
Financial leasing, factoring arrangements which are treated as substitute for
borrowing money come under the head loans and borrowings.
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