What is the source of income for banks?

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By lending money at high interest and paying less interest to depositors

By renting their assets

By selling assets

By working under RBI

answer is A.

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Detailed Solution

The source of income for banks is through lending money at high interest and paying less interest to depositors.
Banks receive demand deposits from depositors who have a bank account with them. It is further used by banks to lend this amount to people who require credit for various purposes. The banks have to keep a certain amount of deposits with them to provide cash to the depositors, as they can withdraw them at any time. They provide interest on deposits while lending those deposits to other creditors. So, they lend money at a high rate of interest to borrowers and pay a lower rate of interest to the depositors. The difference is the real income of the banks.

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