Question

What present of their deposits do banks hold as cash?​

Answer 1

Answer:

Banks hold only a small proportion of 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.

Extra Info:

Banks use the major proportion of the deposits to extend loans.

There is a huge demand for loans for various economic activities.

Banks mediate between them who have surplus fund and are in need of these funds.

Banks charge a higher interest rate on loans than that they offer on deposits.

Hope it helps!!