What do the banks do with the deposits which they collect from the public. Please answer this question fast please.............
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Banks gave various loans with the deposits they collected from the public and recollect it with a higher rate of interest than that for the deposit and make profit
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Banks are considered as a sort of business house only where we actually
buy and sell money. Money is the ultimate finished good. Depositors
viz., public put their money in banks as these financial institutions
lure them with high interest rates on deposits. More the number of
depositors, more is the money credited and this money can then be used
to give loans to other customers for which banks charge interest from
them. So, a cycle of exchange follows. It is barter system of money.
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