explain the loan activities of banks?
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There is a great demand for loans for various economic activities like vehicle loans, education loans, housing loans, personal loan etc. Banks charge a higher interest rate on loans other than what they offer on deposits.
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The loan activities of Banks: (i)Banks keep only a small proportion of their deposits as cash with themselves. This is kept as provision to pay the depositors who might come to withdraw money from the bank on any given day. ... (iii)Banks use the major portion of the deposits to extend loans.12-Dec-2017
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