Question

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

Answer 1

The other part of deposit is used to expand the loan activities of bank..When the depositors come to withdraw money the banks give them from this part of deposits.Since in a day all the the ppl wud not come for withdrawal the bank is able to meditate btwn those who have surplus amonunt i.e the depositors and those who r in need of money i.e. consumers or those who take loans.