Assertion (A): Banks earn their profits by mobilising the depositor's money to the borrowers and keeping a portion of the interest charged.

Reason (R): Banks function for service motives; they do not function to make money, so they charge only interest and do not make any profits.

A is correct.

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R is incorrect.

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Both A and R are true, and R is the correct explanation of A.

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Both A and R are true, but R is not the correct explanation of A.

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Solution

The correct option is B R is incorrect.
Banks not only provide a place to store our money and other valuables but they also function as businesses. The money that is deposited is used to provide loans to others and an interest is also charged on it. Banks function as profit-oriented service-providing institutions. They charge interests on such loans. The interest is their earning.

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