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Question
Identify the main source of income for banks.
Identify the main source of income for banks.
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Solution
The correct option is B Collecting high interest on loans and offering low interest on savings
When banks collect deposits, they pay interest for the savings. Similarly, when banks give loans, they collect interest from the borrowers. The primary source of income for banks is the difference between the interest charged from the borrowers and the interest paid to the depositors. Banks usually collect higher interest from loans than the interest they provide for deposits.
When banks collect deposits, they pay interest for the savings. Similarly, when banks give loans, they collect interest from the borrowers. The primary source of income for banks is the difference between the interest charged from the borrowers and the interest paid to the depositors. Banks usually collect higher interest from loans than the interest they provide for deposits.
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