Question

what is the major source of income for commmercial banks​

Answer 1

commercial banks lent the amount which it mobilises through the deposit .lending is carried out of purely with profit motive. however it will not lend whole of the deposits it will keep certain amount to keep contingencies and lend the remaining portion to business community at a higher rate of interest then allowed by bank on various deposit accounts .the rate of interest charged on loans and advances vary depending upon purpose, period and mode of repayment .difference between the rate of interest on deposits and the rate of charged on the loans is called as spread and it is the main source of income for a bank