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What's the major source of bank's income?
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What's the major source of bank's income?
The main source of income is mainly what they get from people as deposits. as people dont need money everyday on the spot they keep only 15% ready with them else money is used for countering loans for the needy ones.

The main source of income for banks is interest. Generally, a bank pays out lower interests on deposits than it receives on loans. Banks also charge fees for other services such as account charges and pool deposits then invest.

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What's the major source of bank's income?
1 Interest on loans:Banks provide various loans and advances to industries, corporates and individuals. The interest received on these loans is their main source of income.
2 Interest on investments:Banks invest in various government and rated securities, and earn interest y dividends from these investments.3 Fees income:Banks charge fees for performing services like syndication of loans, accepting bills of exchange, providing safety vaults, etc. for their customers.
4 Forex operations:Banks also deal in foreign exchange and act as brokers for the same, earning an income from these operations.
5 Commission on third party products:Banks earn commission income by distributing insurance and mutual fundproducts to their customer base.
Community Answer
What's the major source of bank's income?
Major Source of Bank's Income

Banks generate income through various channels, but their primary source of revenue can be attributed to the following key areas:

1. Interest Income:
Interest income is the primary source of revenue for banks. Banks earn interest income by lending money to borrowers, such as individuals, businesses, and governments. The interest charged on loans and credit facilities is higher than the interest paid on deposits, allowing banks to generate a spread or margin. This interest income contributes significantly to a bank's overall revenue.

2. Non-Interest Income:
Apart from interest income, banks also generate revenue through non-interest income. Non-interest income includes fees and commissions earned from various services provided by banks, such as:

- Service Charges: Banks charge fees for services like account maintenance, ATM usage, check issuance, wire transfers, etc.
- Credit and Debit Card Fees: Banks charge fees for credit and debit card usage, including annual fees, interchange fees, foreign transaction fees, etc.
- Investment and Wealth Management Services: Banks offer investment advisory services, mutual funds, insurance products, and other wealth management services, earning fees and commissions.
- Trading and Investment Income: Banks engage in trading activities in financial markets, generating income from buying and selling stocks, bonds, currencies, and other financial instruments.
- Foreign Exchange Operations: Banks earn income through foreign exchange services, including currency conversions, hedging, and facilitating international transactions.
- Banking and Transaction Fees: Banks charge fees for services like cash management, electronic fund transfers, and trade finance.

3. Interbank Operations:
Banks also earn income through interbank operations. They lend and borrow money from other banks in the interbank market. Banks charge interest on these interbank loans, generating income from these transactions.

4. Investments and Securities:
Banks invest in various securities and financial instruments, such as government bonds, corporate bonds, and stocks. Income is generated from the interest, dividends, and capital gains derived from these investments.

5. Foreign Operations:
Banks with international operations generate income from their overseas branches and subsidiaries. They provide banking services to customers in different countries, earning interest income, fees, and commissions.

6. Loan Syndication and Underwriting:
Banks participate in loan syndications, where multiple banks pool their resources to fund large loans for corporate clients. Banks earn fees for arranging and underwriting these syndicated loans.

Overall, banks generate income from a combination of interest income, non-interest income, interbank operations, investments, foreign operations, and loan syndication. These various sources of revenue allow banks to maintain profitability and sustain their operations.
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Read the source given below and answer the questions that follows:For comparing countries, their income is considered to be one of the most important attributes. Countries with higher income are more developed than others with less income. This is based on the understanding that more income means more of all things that human beings need. Whatever people like, and should have, they will be able to get with greater income. So, greater income itself is considered to be one important goal. The income of the country is the income of all the residents of the country. This give us the total income of the country. However, for comparison between countries, total income is not such a useful measure. Since, countries have different populations, comparing total income will not tell us what an average person is likely to earn. Are people in one country better off than others in a different country? Hence, we compare the average income which is the total income of the country divided by its total population.The average income is also called per capita income.In World Development Reports, brought out by the World Bank, this criterion is used in classifying countries. Countries with per capita income of US$ 12,056 per annum and above in 2017, are called rich countries and those with per capita income of US$ 955 or less are called low-income countries. India comes in the category of low middle income countries because its per capita income in 2017 was just US$ 1820 per annum. The rich countries, excluding countries of Middle East and certain other small countries, are generally called developed countries.Human Development Report published by UNDP compares countries based on the educational levels of the people, their health status and per capita income.Q. What is the main criterion used by the World Bank in classifying different countries?

Read the source given below and answer the questions that follows:For comparing countries, their income is considered to be one of the most important attributes. Countries with higher income are more developed than others with less income. This is based on the understanding that more income means more of all things that human beings need. Whatever people like, and should have, they will be able to get with greater income. So, greater income itself is considered to be one important goal. The income of the country is the income of all the residents of the country. This give us the total income of the country. However, for comparison between countries, total income is not such a useful measure. Since, countries have different populations, comparing total income will not tell us what an average person is likely to earn. Are people in one country better off than others in a different country? Hence, we compare the average income which is the total income of the country divided by its total population.The average income is also called per capita income.In World Development Reports, brought out by the World Bank, this criterion is used in classifying countries. Countries with per capita income of US$ 12,056 per annum and above in 2017, are called rich countries and those with per capita income of US$ 955 or less are called low-income countries. India comes in the category of low middle income countries because its per capita income in 2017 was just US$ 1820 per annum. The rich countries, excluding countries of Middle East and certain other small countries, are generally called developed countries.Human Development Report published by UNDP compares countries based on the educational levels of the people, their health status and per capita income.Q. The compares the development of the countries on the basis of literacy rate, gross enrolment ratio and health status of their people.

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. Banks use the major portion of the deposits to

Read the source given below and answer the questions by choosing the most appropriate option:Countries with higher income are more developed than others with less income. This is based on the understanding that more income means more of all things that human beings need. Whatever people like, and should have, they will be able to get with greater income. So, the greater income itself is considered to be one important goal. Now, what is the income of a country? Intuitively, the income of the country is the income of all the residents of the country. This gives us the total income of the country. However, for comparison between countries, total income is not such a useful measure. Since, countries have different populations, comparing total income will not tell us what an average person is likely to earn. However, for comparison between countries, total income is not such a useful measure. Since, countries have different populations, comparing total income will not tell us what an average person is likely to earn. Are people in one country better off than others in a different country? Hence, we compare the average income which is the total income of the country divided by its total population. The average income is also called per capita income.In World Development Reports, brought out by the World Bank, this criterion is used in classifying countries. Countries with a per capita income of US$ 49,300 per annum and above in 2019, are called high income or rich countries and those with a per capita income of US$ 2500 or less are called lowincome countries. India comes in the category of low middle-income countries because its per capita income in 2019 was just US$ 6700 per annum. The rich countries, excluding countries of the Middle East and certain other small countries, are generally called developed countries.Which of the following ranges of per capita incomes come under rich countries?

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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What's the major source of bank's income?
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