Question

explain the loan activities of bank

Answer 1

Loan activities of the bank. Let us see what the banks do with the deposits they receive. ... Banks charge a higher interest rate on loans than what they offer on deposits. The difference between what is charged from borrowers and what is paid to depositors is their main source of income.

Answer 2

Heya

Here is your answer

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 Banks keep only a small proportion of their deposits on cash with themselves.

E.g: Banks in India hold 15% of their deposits as cash. This is kept as provision to pay the  depositors who might come to withdraw money from the bank on any given day.

 Banks use the major portion of the deposits to extend loans.

 Hence, banks mediate between those who have surplus funds and those who are in the need  of these funds.

 Banks charge a higher interest rate on loans than what they offer on deposits.' The  difference between what is charged from borrowers and what is paid to depositors is their  main source of income.

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