TDS- INTEREST ON BANK DEPOSITS

Jun 28th, 2015
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Lending and borrowing are the two main operations of the financial intermediries and financial intermedieries are the major component of the financial system of any country.Theory of financial intermedieries aurged that banks and other financial institutions mainly take the funds from the surplus units of the system and lend it to the deficit units(Allen & Sontemero).In lieu of it the surplus units demand compensation for the deffered use of the funds and the deficit unit ,who now have the funds from the surplus units would pay compensation for the redily use of these funds.This compensation is actually the opputunity cost of the money and this cost is known to be a intrest rate (Faboozi & Peterson).

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The impact of changes in Interest rate on Non performing loans in PakistanYasir Ayub latent Comsats Institute of Information Technology ,LahoreEmail:MC09103@gmail.comIntroductionLending and borrowing are the two main operations of the financial intermediries and financial intermedieries are the major component of the financial system of any country.Theory of financial intermedieries aurged that banks and other financial institutions mainly take the funds from the surplus units of the system and lend it to the deficit units(Allen & Sontemero).In lieu of it the surplus units demand compensation for the deffered use of the funds and the deficit unit ,who now have the funds from the surplus units would pay compensation for the redily use of these funds.This compensation is actually the opputunity cost of the money and this cost is known to be a intrest rate (Faboozi & Peterson).This cost is considered to have the severe effect on the economic shifts.The variation in the lending rate would definitely increase the cost of debt thus increase the chances of default as proposed in quantitative theory by (Chatterjee, Corbae, Nakajima.According to Obamuyi the loans is considered to be a performing if the borrower repay all the intrest and principle payment according to the contractual terms between the borrower and the lender otherwise it is considered to be a non performing loan(NPL).Non performing loans are the major causes of the the banks facing financial crises and

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