Question

Identify the role of banks in the loan process.

• A. Banks act as middlemen between the depositors and the borrowers.
• B. Banks act as middlemen between the depositors and the RBI.
• C. Banks act as middlemen between the RBI and the borrowers.
• D. Banks act as middlemen between the farmers and the customers.

Answer 1

The correct option is A Banks act as middlemen between the depositors and the borrowers.

There are people with surplus money who deposit in banks, while there are other people who need money. So, banks accept deposits from people, and lend to people in need of money. In this respect, banks act as middlemen between the depositors and the borrowers. This is how banks organise loans for farmers, businesses, factories, and more.