What is the main source of income for banks?
What is the main source of income for banks?
The correct option is D All of the above
The main sources of income for banks are:
1. Interest rate on loans: The main function of a commercial bank is to borrow money for the purpose of lending at a higher rate of interest.
2. Commission: Banks perform numerous services to their customers and charge commission, etc., for such services. A bank collects cheques, rents, dividends, etc., accepts bills of exchange, issues drafts and letters of credit and collects pensions and salaries on behalf of their customers.
3. Interest on investments: Banks also invest an important portion of their resources in government and other first class industrial securities. The interest and dividend received from time to time on these investments is a source of income for the banks. Bank also earns some income when the market prices of these securities rise.
All of the above
The main sources of income for banks are:
1. Interest rate on loans: The main function of a commercial bank is to borrow money for the purpose of lending at a higher rate of interest.
2. Commission: Banks perform numerous services to their customers and charge commission, etc., for such services. A bank collects cheques, rents, dividends, etc., accepts bills of exchange, issues drafts and letters of credit and collects pensions and salaries on behalf of their customers.
3. Interest on investments: Banks also invest an important portion of their resources in government and other first class industrial securities. The interest and dividend received from time to time on these investments is a source of income for the banks. Bank also earns some income when the market prices of these securities rise.
