Question

15 percent of the deposits are retained as cash with the bank why​

Answer 1

Answer:

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Answer 2

1:Banks keep a small proportion of their deposits as cash with themselves. This is usually 15% of their deposits as cash. This amount is kept as a provision to pay the depositors who may come to withdraw the money on any day. This amount is enough because only a small fraction of people come to withdraw money on a given day.

2:The rest of the amount is used by the banks to give money on credit to people who need the credit. A bank charges interest on the loan which it gives to its creditors. The interest rate charged by a bank with no loans is higher than the interest rate given by it on deposits. Thus, interest is the main source of income for banks.

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