Economics: Money and Credit · Class 10 · CBSE Social Science
What is the main source of income for commercial banks?
Practice question from Economics: Money and Credit (Class 10 · CBSE Social Science), with the correct answer and a step-by-step solution.
medium · MCQ · Q-4D2B3B
What is the main source of income for commercial banks?
- A.The interest charged by banks on loans is higher than what they pay on deposits.Correct answer
- B.The government grants subsidies directly to banks.
- C.Fees collected for opening savings accounts.
- D.Interest earned from keeping cash reserves with the RBI.
Solution
Banks charge a higher interest rate on loans than what they offer on deposits. The difference between what is charged from borrowers and what is paid to depositors is their main source of income.
More from Economics: Money and Credit
- Why is money accepted as a medium of exchange?
- What does the double coincidence of wants mean?
- Which of the following institutions is responsible for supervising the functioning of formal sources of loans in India?
- What is collateral in the context of borrowing?
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