Question

HEY THERE BUDDIES.........WANNNA HELP ....PLZZZ#URGENT..........PLZ ANSWER THE QUESTION AS FAST AS any one can..............'how does the banking system work?

Answer 1

Banks basically make money by lending money at rate highers than the cost of money they lend . Banks collect interest on loans and interest payment from the debt securities they own, and pay interest on deposits, CD's, and short term borrowings.

Answer 2

There are three steps involved

First step:-

Banks deposits money from people and give some interest to them...


Second step :-

Bank keeps 15% of the total deposited amount and gives rest of the money as loan, to people in need with some interest..

Third step :-

Bank collect the money when the person who has taken the loan returns it with some extra money as interest, the banks returns the money to the people who has deposited the money.....