Question

how does a bank act as mediator between the deposits and borrowers

Answer 1

the bank gives the money required by the borrowers from the lenders.

Answer 2

Banks acts as an mediator between those who have surplus money and those who needs money ..

For ex ...

If a person has deposited 1 lakh rupee in his account and in other hand a person wants to take loan from bank

At this time the bank will use some negligible amount of money from the depositors account and then will provide loan to the borrower

The borrower will pay his loan with interest and then the bank will return the money of depositor in his account with interest ...

Like this the bank act as an mediator ....

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