Find the incorrect option:a)Banks accept deposit and also pay an amount as interest.b)People's money is safe with banks.c)Banks provide loans only to profit-making businesses.d)It is easy for individuals to get credit who have savings and current account in the banks.Correct answer is option 'C'. Can you explain this answer?

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Find the incorrect option:

a)
Banks accept deposit and also pay an amount as interest.
b)
People's money is safe with banks.
c)
Banks provide loans only to profit-making businesses.
d)
It is easy for individuals to get credit who have savings and current account in the banks.

Correct answer is option 'C'. Can you explain this answer?

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Find the incorrect option:a)Banks accept deposit and also pay an amou...

**Incorrect Option: c) Banks provide loans only to profit-making businesses**

Explanation:
Banks are financial institutions that offer a wide range of services to individuals, businesses, and other organizations. While they do provide loans to profit-making businesses, it is not the only type of loan they offer. Banks also provide loans to individuals, non-profit organizations, and government entities. Therefore, option c) is incorrect.

**Banks provide loans to profit-making businesses:**

Banks do provide loans to profit-making businesses as a way to support their growth and expansion. These loans are often used for various purposes such as purchasing inventory, funding capital investments, expanding operations, or meeting working capital needs. By offering loans to businesses, banks contribute to the development of the economy and help create employment opportunities.

**Banks provide loans to individuals:**

In addition to providing loans to businesses, banks also offer various types of loans to individuals. These loans can be used for personal purposes such as purchasing a house, buying a car, financing education, or covering medical expenses. Individuals can approach banks to borrow money based on their creditworthiness and ability to repay the loan.

**Banks provide loans to non-profit organizations and government entities:**

Banks also extend loans to non-profit organizations and government entities. Non-profit organizations may require loans to support their operations, fund projects, or meet specific financial needs. Similarly, governments may seek loans from banks to finance infrastructure development, public projects, or other initiatives.

**Conclusion:**

In conclusion, option c) is incorrect because banks provide loans not only to profit-making businesses but also to individuals, non-profit organizations, and government entities. Banks play a crucial role in the economy by facilitating financial transactions, accepting deposits, providing credit, and ensuring the safety of people's money.

Answered by Dr Manju Sen · View profile

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Read the source given below and answer the questions that follows:Banks use the major portion of the deposits to extend loans. There is a huge demand for loans for various economic activities. Banks make use of the deposits to meet the loan requirements of the people. In this way, banks mediate between those who have surplus funds (the depositors) and those who are in need of these funds (the borrowers). Banks charge a higher interest rate on loans than what they offer on deposits. A large number of transactions in our day-to-day activities involve credit in some form or the other. Credit (loan) refers to an agreement in which the lender supplies the borrower with money, goods or services in return for the promise of future payment. In rural areas, the main demand for credit is for crop production. Crop production involves considerable costs on seeds, fertilisers, pesticides, water, electricity, repair of equipment, etc. The various types of loans can be conveniently grouped as formal sector loans and informal sector loans. Among the former are loans from banks and cooperatives. The informal lenders include moneylenders, traders, employers, relatives and friends, etc. The Reserve Bank of India supervises the functioning of formal sources of loans. For instance, we have seen that the banks maintain a minimum cash balance out of the deposits they receive. The RBI monitors the banks in actually maintaining cash balance. There is no organisation which supervises the credit activities of lenders in the informal sector. They can lend at whatever interest rate they choose. There is no one to stop them from using unfair means to get their money back. Compared to the formal lenders, most of the informal lenders charge a much higher interest on loans. Thus, the cost to the borrower of informal loans is much higher. In recent years, people have tried out some newer ways of providing loans to the poor. The idea is to organise rural poor, in particular women, into small Self-Help Groups (SHGs) and pool (collect) their savings.Answer the following MCQs by choosing the most appropriate optionQ. Compared to the formal lenders, most of the informal lenders charge a much ................... interest on loans

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Find the incorrect option:a)Banks accept deposit and also pay an amount as interest.b)People's money is safe with banks.c)Banks provide loans only to profit-making businesses.d)It is easy for individuals to get credit who have savings and current account in the banks.Correct answer is option 'C'. Can you explain this answer?

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