Question

If a large number of account-holders do not wish to keep their money in the bank,
how will it affect the bank’s working?

SCERT Telangana Class 8 Social Science Ch 7 Money and Banking

Answer 1

If a large number of account-holders don't wish to keep their money in the bank, they can take their deposits back. Banks create money by lending loans. So if large number of account-holders want to take their money, banks should recover the loans which affects the bank's working slightly.

Answer 2

The primary function of bank is to get accounts open from general public and keep their money in bank account people can withdraw their money whenever they require this is about saving account with banks. The other function of bank is to lend money to people or business entity banks doesn't have their own money to give loan they utilise money which is in the form of fixed deposit banks provide loan on higher interest rate and keep money in fixed deposit with lower interest rate. By this they run the banking operations if large number of account holder do not wish to keep their money in bank the banking operations as well as our economy will stuffer because banks keep money in circulation.