What do the banks do with the deposits which they accept from the publ

1.	What do the banks do with the deposits which they accept from the public
Answer» BANKS\xa0keep only a small proportion of their deposits as cash with themselves. Banks in India, these days hold about 15 per cent of their deposits as cash.\tThis is kept as a provision to the depositors who might come to withdraw money from the bank on any given day.\tBanks use the major portion of the deposits to extend loans. There is a great demand for loans for various economic activities. In this way, banks mediate between those who have surplus funds and those who are in need of these funds.\tBanks charge a higher interest rate on loans than what they offer on deposits.\tThe difference between what is charged from the borrowers and what is paid to depositors is their main source of income.

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