Final answer:
Banks can personally lend money to clients under certain circumstances, such as through bank borrowing and requiring collateral. The lending process involves evaluating the borrower's creditworthiness and assessing their financial history.
Step-by-step explanation:
In the financial capital market, banks can personally lend money to clients under certain circumstances. One way is through a process called bank borrowing, where a bank gets to know a firm or individual extremely well, often by monitoring their sales and expenses through deposits and withdrawals. This allows the bank to assess the creditworthiness of the borrower and make a loan based on their financial history.
Another circumstance is when a bank requires collateral, such as property or equipment, which the bank can seize and sell if the borrower fails to repay the loan. This provides the bank with a form of security and increases their confidence in lending money.
It is important to note that banks have specific criteria and policies in place for lending money, and personal loans to clients are typically subject to thorough evaluation and assessment before approval.