Question

why bank prefer CI system rather than SI system? give two reasons with example p=100 r=5% t=2

Answer 1

first of all CI give banks more interest than SI 
second  SI =100x5x2 / 100 =10+100=110
              CI=100x105x105/100x100 =110.25
SO there is more profit for banks .
over here the profit might look small but when loans are taken around lacks and crores with high interest rate and more time then bank earns a greater profit.