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What do banks do with the deposits they receive from their customers?
Wiki User
∙ 12y ago
They use that money to grant loans to other customers. Any deposit money received by the bank is used to grant loans to customers. The banks charge an interest from the loan customer and pay an interest to the deposit customer. Usually the interest charged to the loan customer is higher than that paid to a deposit customer.
Wiki User
∙ 12y ago
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What best describes why banks aren't allowed to loan out all of their deposits at once?
. If banks loaned out all of their deposits, it would be impossible to meet customers' demands for withdrawals
How can banks afford to pay interest n their customers savings account deposits?
Because they're loaning the money in those deposits at double or more the interest rates that they're paying the depositors.
What is the purpose of requiring banks to keep a specific percentage of their deposits in hand in the vault?
To make sure customers' demands for withdrawals can be met instantly
What is the purpose of requiring banks to keep a specific percentage of their deposits on a hand in the vault?
To make sure customers' demands for withdrawals can be met instantly
What is the purpose of requiring banks to keep a specific percentage of their deposits on hand in the vault?
To make sure customers' demands for withdrawals can be met instantly
What best describes why banks aren't allowed to loan out all of their deposits at once?
. If banks loaned out all of their deposits, it would be impossible to meet customers' demands for withdrawals
What is bank's deposit management?
One of the main functions of banks is to accept deposits. Deposits may be fixed, saving, current etc Banks will have to pay interest to the customers on the basis of the amount deposited by them. Deposits are used for the purpose of lending but since banks are using other peoples money to do business, it should make shure that it will be able to repay the deposits to the respective customers when they claim for it. The management of all this is called deposit management.
Bank Rate refers to the interest rate at which?
Commercial banks receive deposits from the public
How banks afford to pay interest on their customers' savings account deposits?
They loan out the money in their customers' accounts and charge a higher interest rate on the loans.
What is the Features of saving account?
Some features of a savings account include, the ability to draw interest, overdraft protection and the requirement for minimum deposits. Most banks offer savings deposits for their customers.
How can banks afford to pay interest n their customers savings account deposits?
Because they're loaning the money in those deposits at double or more the interest rates that they're paying the depositors.
What is the purpose of requiring banks to keep a specific percentage of their deposits in hand in the vault?
To make sure customers' demands for withdrawals can be met instantly
What is the purpose of requiring banks to keep a specific percentage of their deposits on a hand in the vault?
To make sure customers' demands for withdrawals can be met instantly
What is the purpose of requiring banks to keep a specific percentage of their deposits on hand in the vault?
To make sure customers' demands for withdrawals can be met instantly
Why are banks willing to pay interest on their consumers' deposits?
Banks are the financial intermediaries of the economy. Without them there will be no financial prosperity. Banks accept deposits from people who have surplus and lend out loans to people who need the money. They offer other services like bank accounts, credit cards etc. They are willing to pay interest on the consumers deposits because - they use those deposits to grant loans to other customers. The loan customers pay the bank a higher interest on the loan amount. Usually the rate of interest at which banks offer loans is significantly higher than the rate of interest they give to bank deposit accounts
How can banks afford to pay interest on their customers savings account deposits?
The bank does not just hold on to the money you retain in your savings account. Instead, they offer loans to other customers using that money. The loan customers pay an interest to the bank and the bank in turns offers the savings account holders an interest. Since banks make money by lending our money, they offer us an interest.
What are the liability products in banking?
Current Accounts, savings accounts, Demand drafts and cash deposits are all liability products offered by banks to its customers.
