Question

Banks play an important role in the economy. Which of the following statements is NOT true about the functioning of banks?

• A. Banks charge a very low interest rate on loan than what they provide on deposits.
• B. A major portion of the depositor’s money is used to extend loans.
• C. Banks maintain about 15 percent of their total deposits as cash.
• D. Banks facilitate transactions without payment of cash.

Answer 1

The correct option is A Banks charge a very low interest rate on loan than what they provide on deposits.