ECONOMICS (CBSE/UGC NET)

ECONOMICS

ECONOMIC INSTITUTIONS

Question [CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
Commercial banks earn money in all of the following ways EXCEPT:
A
Investing in other companies
B
Charging fees for their services
C
Collecting interest on loans
D
Taking a percentage off of all deposits
Explanation: 

Detailed explanation-1: -They earn fees for customer services, such as checking accounts, financial counseling, loan servicing and the sales of other financial products (e.g., insurance and mutual funds).

Detailed explanation-2: -Excess deposits may be used to create credit to lend via commercial loans and other credit products or lend to other institutions at the overnight rate. Credit creation is a critical function of a commercial bank. Interest is the highest percentage of revenue at commercial banks[1].

Detailed explanation-3: -Detailed Solution. The correct answer is Deposits.

Detailed explanation-4: -Accepting deposits. Granting loans and advances. Agency functions. Discounting bills of exchange. Credit creation. Other functions.

There is 1 question to complete.