This source of financing is considered suitable when large funds for longer duration are required for expansion, reorganization and modernization of an enterprise”.
(i)Identify the source of finance mentioned in the above statement.
(ii)State any three demerits of the above-identified source of finance in point (i).

Dear student
1) Financial institutions is the most suitable source of finance when large funds for long duration are required
2) Demerits of Financial institutions :
• Financial institutions very strict and regid criteria for granting loans .Too many formalities needs to be complere which make the procedure time-consuming and expensive. • Some restrictions such as restriction on dividend payment are imposed on the powers of the borrowing company by them.
• Financial institutions may have their nominees on the BOD's of the borrowing company there by restricting the powers of the company.

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