explain with examples how are people involved with the banks?
Answers
a. Banks are an important organisation and medium of making accepting deposits and lending money to the public.
b. People can open a current account or a saving account in banks and can deposit their money.
c. Banks give reasonable amount of interest on the money deposited.
d. The deposits made by the people can be withdrawn and hence are called demand deposits,
e. There is a facility available to people to settle their cash transactions by making cheques,
f. One of the important activities of bank is to make loans to the people from the deposits.
g. These loans are extended on a particular rate of interests for various activities, it could be for establishing a business, house loan, car loans etc.
h. The interest rate are generally high on these loans than offered in deposits by the banks which is its main source of income.
i. These loans are offered against a collateral
j. Banks also offer facility of forming demand deposits and fixed deposits.
k. Then there are Grameen banks also set up in rural areas. It provides loan to the poorest in rural areas without any collateral. It offers loan at a very reasonable interest rate.
l. It has provided loans to large number of women helping them to start small income generating activities.
Involvement of people with the banks-
1. The primary involvement of people with the banks can be broadly classified in two ways-
a. Depositors
b. Borrowers
2. Banks are essential financial institutions that encourage saving the excess amount of their incomes in their respective bank accounts. Banks provide facilities like check facilities, withdrawal slips, debit cards, and credit cards. Depositors can withdraw and save money in their savings accounts without any restrictions. Current accounts are the best options for businessmen and industrialists. A bank provides minimal interest on the deposits in a savings account but not in the current account as frequent withdrawals take place.
3. Banks provide loan facilities to their customers. Loans like housing loans, business loans, personal loans, and others are issued by banks.