Class 10 Exam > Class 10 Questions > Banks use the major portion of the deposits t...
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Banks use the major portion of the deposits to:
- a)Keep as reserve so that people may withdraw
- b)Meet their routine expenses
- c)Extend loans
- d)Meet renovation of bank
Correct answer is option 'C'. Can you explain this answer?
Most Upvoted Answer
Banks use the major portion of the deposits to:a)Keep as reserve so th...
Major portion of the deposits is used by banks for extending loans to borrowers.
Some portion is used as cash reserve ratio with the RBI.
Some portion of money is used as statutory liquid ratio deposit with the bank itself as set by RBI.
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Community Answer
Banks use the major portion of the deposits to:a)Keep as reserve so th...
Banks use the major portion of the deposits to extend loans. This is because banks earn money by charging interest on loans. The more loans they extend, the more interest they earn.
Headings:
1. Deposits
2. Banks' earnings
3. Interest on loans
Deposits:
Banks receive deposits from their customers, which they can use in various ways. However, the major portion of the deposits is used by banks to extend loans.
Banks' earnings:
Banks earn money by charging interest on loans. The interest charged on loans is usually higher than the interest paid on deposits. This difference between the interest earned and interest paid is known as the net interest income. Banks also earn money by charging fees for various services such as ATM withdrawals, account maintenance, etc.
Interest on loans:
The main reason why banks use the major portion of the deposits to extend loans is that they earn money by charging interest on loans. When a person takes a loan from a bank, the bank charges interest on the amount borrowed. This interest is usually calculated as a percentage of the loan amount and is added to the principal amount. The borrower has to repay the loan along with the interest charged. The interest charged on loans is usually higher than the interest paid on deposits, which is why banks earn more by extending loans.
In conclusion, banks use the major portion of the deposits to extend loans, as this is the main way in which they earn money. The interest charged on loans is usually higher than the interest paid on deposits, which is why banks prefer to extend loans.
Headings:
1. Deposits
2. Banks' earnings
3. Interest on loans
Deposits:
Banks receive deposits from their customers, which they can use in various ways. However, the major portion of the deposits is used by banks to extend loans.
Banks' earnings:
Banks earn money by charging interest on loans. The interest charged on loans is usually higher than the interest paid on deposits. This difference between the interest earned and interest paid is known as the net interest income. Banks also earn money by charging fees for various services such as ATM withdrawals, account maintenance, etc.
Interest on loans:
The main reason why banks use the major portion of the deposits to extend loans is that they earn money by charging interest on loans. When a person takes a loan from a bank, the bank charges interest on the amount borrowed. This interest is usually calculated as a percentage of the loan amount and is added to the principal amount. The borrower has to repay the loan along with the interest charged. The interest charged on loans is usually higher than the interest paid on deposits, which is why banks earn more by extending loans.
In conclusion, banks use the major portion of the deposits to extend loans, as this is the main way in which they earn money. The interest charged on loans is usually higher than the interest paid on deposits, which is why banks prefer to extend loans.
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Banks use the major portion of the deposits to:a)Keep as reserve so that people may withdrawb)Meet their routine expensesc)Extend loansd)Meet renovation of bankCorrect answer is option 'C'. Can you explain this answer? for Class 10 2025 is part of Class 10 preparation. The Question and answers have been prepared according to the Class 10 exam syllabus. Information about Banks use the major portion of the deposits to:a)Keep as reserve so that people may withdrawb)Meet their routine expensesc)Extend loansd)Meet renovation of bankCorrect answer is option 'C'. Can you explain this answer? covers all topics & solutions for Class 10 2025 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for Banks use the major portion of the deposits to:a)Keep as reserve so that people may withdrawb)Meet their routine expensesc)Extend loansd)Meet renovation of bankCorrect answer is option 'C'. Can you explain this answer?.
Banks use the major portion of the deposits to:a)Keep as reserve so that people may withdrawb)Meet their routine expensesc)Extend loansd)Meet renovation of bankCorrect answer is option 'C'. Can you explain this answer? for Class 10 2025 is part of Class 10 preparation. The Question and answers have been prepared according to the Class 10 exam syllabus. Information about Banks use the major portion of the deposits to:a)Keep as reserve so that people may withdrawb)Meet their routine expensesc)Extend loansd)Meet renovation of bankCorrect answer is option 'C'. Can you explain this answer? covers all topics & solutions for Class 10 2025 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for Banks use the major portion of the deposits to:a)Keep as reserve so that people may withdrawb)Meet their routine expensesc)Extend loansd)Meet renovation of bankCorrect answer is option 'C'. Can you explain this answer?.
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