Question

How do the deposits with the banks become their source of income. explain in three points

Answer 1

1) some people have extra money at the end of thr month so they deposit it in banks so that the money starts increasing due to rate of interest and they can take it whenever they want to these are called demand deposits
2) some people who are in need of money can take a loan from the bank and the bank will give them the desired money , they have to repay the money with the rate of interest .
3) the rate of interest on loans is more than the rate of interest on demand deposits , the difference b/w them is the source of income for banks.
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