Social Sciences, asked by Heenapruthi2869, 11 months ago

For which purpose is a major portion of the deposits with the banks used?

Answers

Answered by nivabora539

6

Answer:

Major portion of the deposits is used by banks for extending loans to borrowers. Some portion is used as cash reserve ratio with the RBI. Some portion of money is used as statutory liquid ratio deposit with the bank itself as set by RBI.

Answered by topwriters

1

Banks

Explanation:

Commercial banks use a major portion of their deposits for credit creation. The process of credit creation begins with banks lending money out of deposits that are accepted from the people. The banks are regulated by the Reserve Bank of India (RBI) and there are regulations that the bank should maintain a certain proportion of deposits in the form of cash reserves. The reserve so maintained with the RBI is known as cash reserve ratio. After from this cash reserve, the remaining portion of deposits are given out as loans by the bank.

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