Question

Only a part of the total deposits is kept as cash in the bank-safe. Why is this so and how does this benefit the bank?

Answer 1

Banks only keep a small portion of money deposited with them about 15% to pay the depositors who may come to withdraw money on a given day.

The deposits submitted by the people can be a great helpful hand in strengthening the economy of a nation.

Answer 2

A person who gets salary at the end of the month has extra money in the beginning of the next month. So he deposit it in the bank.so he becomes a depositer. The bank only keeps 15% of the total money and the rest is given as loans with a specific interest rate so when the depositer comes to ask they will be able to give the money back when ever they come . When the borrower pays back the money with interest the money deposited by the depositer will be returned back with the interest amount. The difference between the interest amount and the borrowed amount is the salary for the bank people.☺