Time Multiple Counter Loan (TMCL) is a cash loan system where a customer As per this can get a cash loan without paying any interest from the bank, however, a small amount of counter loan/deposit (free of charge) for a longer period is to be provided to the bank. Under this mode of financing a larger amount of cash loan with shorter maturity issued by the bank is compensated through a smaller amount of loan/deposit for a larger period by customer.
Banks can earn a higher rate of profit by investing this shorter amount of cash in a long term project. The following example would make concept clear. A person needs an amount of loan in cash amounting to Rs; 500,000 for one year and request to the financier by offering Rs; 125,000 for longer period which equates the daily product of both loans. Daily product of NPR 500,000 for one year become Rs; 182,500,000 (500,000*365).
In order to equate the daily product of both amounts, deposit (loan) by customer must remain in the bank for a period of 1460 days or 4 years (182,500,000/125,000).