What do the banks do with the deposits which they collect from the public
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In India , banks keep 15% of the deposits made by people. Rest of the deposits are lend out as loans to people who need it at some interest which they have repay after certain period of time.
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After retaining a portion as reserve, the Banks lend the rest of the money deposited with them to different kinds of borrowers, the broad outline of which is drawn up by the Reserve Bank of India, some of which is as per the policies of the incumbent Government.
So, money is lent to farmers, industrialists, businessmen and retail customers. The Banks charge a higher interest on the borrowers than they pay to their depositors. The difference is the Banks' earning.
So, money is lent to farmers, industrialists, businessmen and retail customers. The Banks charge a higher interest on the borrowers than they pay to their depositors. The difference is the Banks' earning.
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