Subvention Meaning

Subvention is the term which is used in the context of banking or with respect to financial institutions, it means giving subsidy on interest rate on the loan taken by an individual. For example if the interest rate on debt is 11 per cent and bank gives loan at 7 per cent to a person than the difference of 4 % is called subvention. This type of subsidy is often given on educational loans or to farmers and to other such people who may not be in a position to pay higher rates of interest.

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