Brush Stroke

What is Haircut in Finance?

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Brush Stroke

Amar

decided to get a haircut from Taj Salon.

Brush Stroke

Murli Manohar

His father, who himself is a barber felt cheated. Money that was spent in Taj was equivalent to him cutting hair of 20 people.

Brush Stroke

When you give security to bank for a loan, then bank reduces the value of this security.

HAIRCUT IN FINANCE

Brush Stroke

Banks reduces/cut the value, similar to a haircut to protect themselves from market risk.

Haircuts are depicted in percentage terms, it could be anywhere between 15-60%