Question

Explain the three loan activities of banks in india

Answer 1

Bank provided loans for various economic activities

Banks keep only a small proportions of the deposits with them as cash

These deposits are used to meet the loan requirement

Bank intermediates between those who have surplus funds and those who are in need of these funds

Bank offer very less interest on deposits than what they demand on loans

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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