Loan Activities of Banks
- It is seen that the banks keep a small proportion of the deposits as cash themselves.
- In India, the banks hold about 15% of their deposits as cash. This is done so that the bank can pay the depositors who might come to withdraw money from the bank someday.
- It is a major portion of the deposits that are used by banks to extend loans.
- Huge demand for loans can be seen for various economic activities.
- It is seen that a higher interest rate on loans is charged by banks than what they offer on deposits.
- The difference between what is charged from borrowers & what is paid to depositors serves as the main income source for banks.
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CBSE Notes Class 10 Economics Chapter 3: Money and Credit
In the chapter, CBSE Notes Economics Chapter 3: Money and Credit, we will learn about the modern forms of money and also how they are connected with the banking system. In the latter part of the article, we will know about the credit system and how it impacts the borrowers, depending upon the situation, and also go through these notes for the understanding of the topics in detail.