Choose that the given statement is true/false:

The main source of income for banks is interest on deposits.

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True

False

answer is B.

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Detailed Solution

The above statement is false.
A commercial bank's primary duty is to borrow money to lend it out at a greater interest rate. Banks provide various services to their clients and charge commission, etc., for those services. On behalf of its clients, a bank collects checks, rent, dividends, and other similar payments; accepts bills of exchange; issues drafts and letters of credit; and gathers pension and salary payments. Interest on investments: Government and other first-class industrial securities make up a significant share of the resources that banks invest in. The banks gain income from the occasional interest and dividends received on these investments. When the market values of these securities increase, the bank also receives some money.
The correct statement should be that a banks' primary sources of income are: Interest rates on loans.

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