Question

What do the banks do with the deposits which they accept from the public? There is an interesting

mechanism at work here. Banks keep only a small proportion of their deposits as cash with

themselves. For example, banks in India these days hold about 15 per cent of their deposits as

cash. This is kept as provision to pay the depositors who might come to withdraw money from the

bank on any given day. Since, on any particular day, only some of its many depositors come to

withdraw cash, the bank is able to manage with this cash.

Banks use the major portion of the deposits to extend loans. There is a huge demand for loans for

various economic activities. Banks make use of the deposits to meet the loan requirements of the

people. In this way, banks mediate between those who have surplus funds (the depositors) and

those who are in need of these funds (the borrowers). Banks charge a higher interest rate on loans

than what they offer on deposits. The difference between what is charged from borrowers and

what is paid to depositors is their main source of income.

Answer the following MCQs by choosing the most appropriate option :

16.1 Banks keep 15% of the money in cash to- 1

i. Meet the government’s demand

ii. Be in safe side

iii. Deal with the cash demand of the depositors

iv. To get saved from bank failure

16.2 What do you think, from the following options which one is best suited central idea

of the passage? i. Bank Savings

ii. Loan activities of the bank

iii. Depositors and Borrowers

iv. Methods of income by the Baanks

16.3 The money used by bank to provide loans comes from 1

i. The Government

ii. The borrowers

iii. The bank deposits

iv. Private sector

16.4 The source of income of the bank is 1

i. Difference between deposits and lending

ii. Demand deposits

iii. Government’s regular funding

iv. Common people’s saving​

Answer 1

private sactor

Explanation:

because private sactor is place of everyone

Answer 2

Answer:

private sacrtor is the answer for this