It is required for up gradation of technology, introduction of a new product, investment in working capital and for repayment of debts. It is raised for a period raining for more than one year to less than financial institutions; (c) public deposits, and (d) commercial banks.

The need for medium-term funds arises because of changing technology, introduction of a new product or necessity to invest on advertisement and sales promotion. The extra income generated out of this investment is used to pay back the medium-term capital.

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