Distinguish between Primary deposits and Derivative deposits. – InterviewSolution

1.

Distinguish between Primary deposits and Derivative deposits.

Answer»

Primary Deposits	Derivative Deposits
(i) It is created when customers deposit their money in the bank by opening new accounts.	(i) It arises when customers are granted loans and advances by a bank.
(ii) It does not create any kind of credit creation.	(ii) It contributes directly towards credit creation activity of commercial banks
(iii) Whenever customer makes payment to the banks, primary deposits are created	(iii) Whenever the loan is granted, derivate deposit is created.

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