Question

Answer the question.
Explain any three disadvantages of borrowing funds from specialized financial institutions.

Answer 1

The three disadvantages of borrowing funds from specialized financial institutions are :

• Certain restrictions such as restrictions on dividend payments are imposed on the powers of the borrowing company by the financial institutions.
• The concern requiring finance from special financial institutions has to submit itself to a thorough investigation.
• The high-interest rates charged by the financial institutions which make this form of finance very extravagant.