People deposit money in banks. A certain percentage of the total deposit is kept as cash for depositors to withdraw. What happens to the remaining proportion of the total deposit?

Deemed to be profit for the banks

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Given out as loans

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Paid to the government

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Paid to the RBI

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Solution

The correct option is B Given out as loans
People deposit money in banks. However, the entire deposit is not held as cash. A certain percentage of the total deposit, as defined by the RBI, is kept as cash. The rest of the deposits are used by the bank to provide loans. Banks earn profit from the interest generated from these loans.

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According to RBI, ___ is defined as the amount of cash the bank keeps as a percentage of the total deposits.

Bank deposits of cash by depositors is called:

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