1
Question
Give Reason Or Explain the following statements.
Every loan creates a deposit or commercial banks can create deposits through loan.
Every loan creates a deposit or commercial banks can create deposits through loan.
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Solution
A commercial bank
functions on the fact that they take loan from the people who have abundant sum
of money and the
banks uses this sum to lend to the people who require money for the purpose of
consumption and investment. Every loan which is taken by the bank from the
people creates a deposit in the name of that person where the person can withdraw any sum of money as per their wish whenever they want.
A commercial bank functions on the fact that they take loan from the people who have abundant sum of money and the banks uses this sum to lend to the people who require money for the purpose of consumption and investment. Every loan which is taken by the bank from the people creates a deposit in the name of that person where the person can withdraw any sum of money as per their wish whenever they want.
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