Q3 of 26 Page 3

What do banks do with the deposits they accept from customers?[CBSE 2012]

Banks use most of the deposits to extend loans to people.

Note:

Banks pay a rate of interest to the depositors. They use these deposits to give money to those who want to borrow. Banks receive a higher interest rate for loans. The difference between both the interest rates is the bank’s main income.

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