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No, anyone with money can lend money.

However, banks follow a proven process before lending money, that includes verifying income, checking credit ratings, requiring signatures on powerful contracts and so forth.

Banks have established a best practices process for lowering their risk of loss and elevating their chances of making money in interest on money they lend.

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15y ago

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How can a bank create an infinite amount of money?

Banks do not create money, they only use the money from saving accounts and lend it to people. When they lend the interest from the loan is profit for the bank.


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The bank customers share of profit made on loans by the bank is called the "Interest". It is the money the bank pays the customer for having their money deposited with the bank. As you know, the bank earns an interest income from loan customers for the money they lend them, and since this money they lend is taken from the deposits placed by customers, banks share the profit by paying an interest to the customer who has placed the deposit with them.


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The bank would deposit a portion of the money with the central bank and then think of ways to lend this money and earn an income out of it.


Do banks have a limit on lending money?

Yes, the amount a bank can lend depends on the amount of money they have plus a reserve requirement. For example, if a bank's reserve requirement is 10% and you deposit $10,000 the bank can lend a maximum of $100,000 based on your 10k, and this sums up for all it's money.


Where did the bank gets its money to lend?

They get it from the other Banks customers accounts i think!


What do banks use depositors money?

The bank customers share of profit made on loans by the bank is called the "Interest". It is the money the bank pays the customer for having their money deposited with the bank. As you know, the bank earns an interest income from loan customers for the money they lend them, and since this money they lend is taken from the deposits placed by customers, banks share the profit by paying an interest to the customer who has placed the deposit with them.


What are the features of commercial bank?

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How does money in my account benefit the bank. does it mean the bank is richer?

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Would a bank loan or lend money?

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