Why do banks keep a small proportion of deposit as cash with themselves.
Answers
Answered by
52
banks keep 15 percent of there deposits as cash so as to pay those depositors who come to withdraw cash on any particular day
Michelle15:
hope this helps
Answered by
37
Banks keep a small potion mostly 15% of total deposits as cash with themselves which is known as Reserve. The banks keep such a small portion of money as reserve to pay the depositors who might come to withdraw money from their accounts on any day in the bank.
The large portion of the deposits is given as loan on interest to those who need the money. In this way the banks operate their business.
Similar questions