Soft Loans are loans with lenient terms

Q.  What is a soft loan?
- Published on 01 Mar 16

a. Loan in terms of Gold
b. Loan for Services sector development
c. Loan for IT sector development
d. Loan with lenient terms

ANSWER: Loan with lenient terms
  • A soft loan is basically a loan on comparatively lenient terms and conditions as compared to other loans available in the market. These easier conditions might be in the form of lower interest rates, prolonged repayment duration, etc.
  • The newly launched New Development Bank (NDB) of BRICS is aid to be not geared to issue soft loans and will go by market standards.
  • The repayment of these soft loans might also include interest holidays. This process of extending soft loans is also known as soft financing or concessional funding. As the loans extended are at much easier terms, these are generally not provided by private financial institutions. They are primarily provided by government agencies.

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