Solution:
The three important terms of credit are Collateral, Time period and Rate of interest.Collateral is the security a borrower has to offer to take a loan. It can be anything holding a value equal to or higher than the loan amount, such as a land title, factory, livestock, house, bank deposits, etc. This is used as a guarantee for the loan. The period is the duration of the loan till the date of repayment, along with the desired amount of interest set up by both parties. The interest rate is the proportion of the amount the lender lends money to the creditor. The RBI majorly decides the rate of interest.
