World Library  
Flag as Inappropriate
Email this Article

Soft loan

Article Id: WHEBN0004141239
Reproduction Date:

Title: Soft loan  
Author: World Heritage Encyclopedia
Language: English
Subject: Subprime lending, Asian Development Bank, Africa–China economic relations, Kayankerni Bridge, Ralkuli Bridge
Collection:
Publisher: World Heritage Encyclopedia
Publication
Date:
 

Soft loan

A soft loan[1] is a loan with a below-market rate of interest. This is also known as soft financing. Sometimes soft loans provide other concessions to borrowers, such as long repayment periods or interest holidays. Soft loans are usually provided by governments to projects they think are worthwhile. The World Bank and other development institutions provide soft loans to developing countries.

This contrasts with a hard loan, which has to be paid back in an agreed hard currency, usually of a country with a stable robust economy.[2]

An example of a soft loan is China's Export-Import Bank, who gave a $2 billion soft loan to Angola in October 2004 to help build infrastructure. In return, the Angolan government gave China a stake in oil exploration off the coast.[3] Another example is the interest free soft loan of Rs. 20 billion given by the Asian Development Bank (ADB) to the government of West Bengal (India) on the condition that it be used for health, education and developing infrastructure and that the government would implement 16 economic reforms.[4]

The field of Natural Finance uses the term Soft Loan as an enforced ability-based repayment loan where the softness is not based on below market interest, but rather on terms that don't include fixed dates for repayment, but do mandate repayment when borrower is able to.

References

  1. ^ http://www.businessdictionary.com/definition/soft-loan.html
  2. ^ "Definition of Hard loan". Investopedia. Retrieved 29 October 2013. 
  3. ^ http://www.iags.org/chinainafrica.pdf
  4. ^ Mitra, Amit (16 March 2013). "Bengal gets 2,000-cr soft loan from Asian Development Bank". Times of India. Retrieved 29 October 2013. 

External links

  • Soft loan by India to Mongolia Dated: 15 September 2009


This article was sourced from Creative Commons Attribution-ShareAlike License; additional terms may apply. World Heritage Encyclopedia content is assembled from numerous content providers, Open Access Publishing, and in compliance with The Fair Access to Science and Technology Research Act (FASTR), Wikimedia Foundation, Inc., Public Library of Science, The Encyclopedia of Life, Open Book Publishers (OBP), PubMed, U.S. National Library of Medicine, National Center for Biotechnology Information, U.S. National Library of Medicine, National Institutes of Health (NIH), U.S. Department of Health & Human Services, and USA.gov, which sources content from all federal, state, local, tribal, and territorial government publication portals (.gov, .mil, .edu). Funding for USA.gov and content contributors is made possible from the U.S. Congress, E-Government Act of 2002.
 
Crowd sourced content that is contributed to World Heritage Encyclopedia is peer reviewed and edited by our editorial staff to ensure quality scholarly research articles.
 
By using this site, you agree to the Terms of Use and Privacy Policy. World Heritage Encyclopedia™ is a registered trademark of the World Public Library Association, a non-profit organization.
 


Copyright © World Library Foundation. All rights reserved. eBooks from Project Gutenberg are sponsored by the World Library Foundation,
a 501c(4) Member's Support Non-Profit Organization, and is NOT affiliated with any governmental agency or department.