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Maturity is used in various cases like bank loans, maturity of savings, credit card maturity, etc.
What is Maturity? What is Loan Disbursement?
What is Maturity?
Maturity, known as maturity in English, is a term used extensively in the financial-banking sector to refer to loans or savings that need to be settled when due.
Bank Loan Maturity
Currently, borrowing from banks for personal, business, or corporate investment is common. Alongside this, the term maturity or bank debt restructuring has become familiar due to numerous instances where repaying debt on time is challenging due to limited economic capacity.
Maturity means that, according to the contract, the client must repay the borrowed capital within the specified timeframe. However, due to an inability to repay the debt, the bank will provide a new loan amount to settle the old loan. This effectively transforms the old debt into an entirely new loan to avoid bad debts.
When it comes to credit cards, maturing to avoid bad debts is also a concern for many card users. Credit cards are a type of card that operates on the principle of spending first and paying later. However, if the payment deadline is missed, it will incur high-interest rates and may even lead to bad debts. Bad debts are difficult to collect, and being listed in the 'bad debt list' makes it challenging to secure a bank mortgage, as they will doubt the customer's ability to repay. Therefore, when the payment deadline approaches, many people use the credit card maturity service to avoid bad debts, even though credit card maturity often comes with high-interest rates.
Maturity of savings deposits
When a savings book reaches its maturity date, customers will receive both the principal and interest, as agreed upon in the savings deposit contract. If the customer doesn't show up to withdraw the savings book by the due date, the bank will automatically renew your savings amount for a new term. Upon maturity of the savings deposit period, you will also receive the principal and interest from the bank.
What is disbursement?
In addition to maturity, disbursement is a term frequently used in banking. In English, disbursement means disbursement and is utilized in various contexts. Apart from cash, disbursement is also used with checks, purchase orders, and more.
Bank disbursement
Bank disbursement is the process of releasing funds after completing a series of borrowing procedures between the bank and the customer. Specifically, in bank loan transactions, after the customer has completed all the borrowing procedures with a file. The bank then checks the validity of the file, and if approved, the final step is for the bank to disburse (release funds) for that loan. A bank loan agreement can be disbursed once or multiple times.
Disbursement in the securities field
In the context of securities, disbursement is a term used to indicate the act of injecting capital into one or more portfolios of securities at a specific point in time.
Disbursement of ODA capital
ODA capital is a source of development assistance from developed countries to developing countries, offered with low or even zero interest rates. To acquire this funding, countries seeking aid must complete the necessary documentation and procedures. After being accepted by developed countries, they will plan the disbursement in specific stages. The disbursement of funds may be halted or reduced if the project activities requiring funding are ineffective, or if the developing country has achieved a higher level of development.
Disbursement in other fields
+) In accounting: disbursement is the payment of money after receiving approved invoices and documents.
+) For contractors: Disbursement is the payment of the entire construction volume to the investor.
+) For investors: Disbursement is the payment to partners (contractors) after completing the necessary procedures.
Understanding the terms Maturity and Disbursement will facilitate smoother financial exchanges between borrowers and banks. Knowledge of these terms can help customers avoid penalties or high-interest payments if they are well-informed about these regulations. Hopefully, through this article, readers have gained a clear understanding of Maturity and Disbursement to make informed decisions. In addition to these terms, explore the latest bank interest rates to make the best decision for your savings.
Credit cards are widely used, but misunderstanding what a credit card is and how it operates can lead to misconceptions, resulting in mistakes and unjustified losses due to interest payments.
