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| 1. |
Explain the loan activities of bank ? |
| Answer» 1. Bank keeps only a small portion of their deposits as cash with themselves.(15% of their deposits as cash.)2. This is kept as provision to pay the depositers who might come to withdraw money from the bank on any given day.3. Bank use the major portion of the deposits to extend loans 4. There is a huge demand of loans for various economic activities.5. Banks make use of the deposits to meet the loan requirements of the people .6. In this way, bank mediate between those who have surplus funds (the depositers) and those who have surplus funds (the borrowers). | |