Question

Identify the role of banks in the loan process.

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

Answer 1

The correct option is A Banks act as middlemen between depositors and 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 who need money. In this respect, banks act as middlemen between depositors and borrowers. This is how banks organise loans for farmers, businesses, factories, and more.