The principal is the amount due on any debt before interest, or the amount invested before returns. All loans start as principal, and for every designated period that the principal remains unpaid in full the loan will accrue interest and other fees.


Commercial bank ensures the best services to their customers. The success of a bank depends on the services provided by the bank. The customer chooses those banks that provide improved services.

Frequently Asked Questions

What are the key principles of the Code of banking Practice?

  • Trust and confidence.
  • Integrity.
  • Service and Transparency.
  • Accountability.

What are the five principles that banks follow?

  • Liquidity
  • Safety
  • Diversity
  • Stability
  • Profitability

When a bank lends money to the corporate person the relationship is?

When the bank lends money to the customer, the customer is the borrower and the bank is the lender. The relationship between the banker and the customer is therefore that of a creditor and a debtor. Indemnity Bond Law and Legal Definition.

What do you mean by principal?

1 : a person who has controlling authority or is in a leading position: such as. a : a chief or head man or woman. b : the chief executive officer of an educational institution.

What are financial principles?

Principles act as a guideline for the investment and financing decision. Financial managers take operating, investment, and financing decisions. Some of this related to the short term and some long term.

What are banks responsibilities?

Although banks do many things, their primary role is to take in funds—called deposits—from those with money, pool them, and lend them to those who need funds. Banks are intermediaries between depositors (who lend money to the bank) and borrowers (to whom the bank lends money).

Who does Code of banking Practice apply to?

Individual customers. Small business customers with an annual turnover of <$10m in the previous financial year, fewer than 100 FTE employees and <$3m total debt to all credit providers. A guarantor or prospective guarantor securing a loan to an individual or small business customer.

Is the Banking Code of practice law?

The Code. The Banking Code of Practice is a set of promises about how banks will behave when dealing with current and potential customers, small businesses and guarantors. For signatory banks, the Code is part of the bank’s contract with a customer and is enforceable by law.

What do you mean by bank?

Bank, an institution that deals in money and its substitutes and provides other money-related services. In its role as a financial intermediary, a bank accepts deposits and makes loans.

Who is bailor in banking?

A bailor is an individual who temporarily relinquishes possession but not ownership of a good or other property under a bailment agreement. The bailor entrusts possession of the good(s) or property to another individual, known as the bailee.

Which is the most important relationship between banker and customer?

The primary relationship between a banker and his customer is a debtor and a creditor or vice versa.

What is the difference between principal and principles?

“Principle” is a noun. It can be described as a rule or idea in relation to behaviour or how something works. “Principal”, on the other hand, can be either used as a noun or an adjective.

What is principal in accounting?

Principal is the amount of a debt that was originally borrowed, and which remains unpaid. This amount does not include any accumulated unpaid interest associated with the debt. The term can also refer to the chief participant in a contract or other business transaction.

What is the first principle of money?

The first principle of money is: Don’t lie about your money. The Second Principle of money is to: Focus on what you have, not on what you don’t have.

What is the principal principle?

A principle is a rule, a law, a guideline, or a fact. A principal is the headmaster of a school or a person who’s in charge of certain things in a company. Principal is also an adjective that means original, first, or most important.