Question

Commercial Bank creates active deposits by what?

Answer 1

Explanation:

Derivative or active deposits are created by the bank by opening a deposit account in the name of the person concerned who contacts bank to borrow money. Then the bank plays an active role in the creation of such deposits. This type of dealings is known as an active deposits

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Answer 2

Active deposits are created by the bank by opening a deposit account in the name of the person concerned who contacts bank to borrow money.

Explanation:

• Active deposits are also called as derivative deposits.
• The banks play an active role in the creation of active deposits.
• In four methods the commercial bank create active deposit: such as i)Collecting deposits ii) Reserve bank grants iii) Advancing loans iv) Utility services
• Purchasing securities or other forms of assets from the public also created by the bank is called active deposits.
• Every loan creates a deposits , it is called active deposit , because it has been created actively by the bank.
• The derivative deposit was derived directly from the loan transaction of the bank.

To Learn More...

1. Example of primary deposits credit creation by commercial banks

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2.The following questions in about 100-150 words.(a) state the functions of commercial banks.

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