Term loans are also known as term/project finance. The primary source of such loans are financial institutions. Commercial banks also provide term finance in a limited way. The financial institutions provide project finance for new projects as also for expansion/diversification and moderation whereas the bulk of term loans extended by banks, is in the form of working capital term loan to finance the working capital gap. Though, they are permitted to finance infrastructure projects on a long-term basis, the quantum of such financing is marginal.

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