Question

What would happen if no one deposits their money in banks?

• A. The country cannot grow economically.
• B. People can have more money in hand.
• C. Banks cannot give loans.
• D. Banks can be free from the interest for deposits.

Answer 1

Answer: (A), (C)

Banks cannot give loans.

Bank deposits ensure the safety of our money. However, the banks too derive some benefits from our deposits, which in turn benefits the country as a whole.

Banks use deposits to provide loans. These loans increase the economic activities in the country, leading to economic growth. Also, banks profit from the interest on these loans.