ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -Answer and Explanation: The correct answer is c. Transferring money from savers to lenders. Bank accepts deposits from the customers out of the deposits made they lend the same money to the borrower who returns the principal amount of money borrowed plus interest that is imposed on the borrowed money.

Detailed explanation-2: -Although banks do many things, their primary role is to take in funds-called deposits-from those with money, pool them, and lend them to those who need funds. Banks are intermediaries between depositors (who lend money to the bank) and borrowers (to whom the bank lends money).

Detailed explanation-3: -“Banks lend by simultaneously creating a loan asset and a deposit liability on their balance sheet. That is why it is called credit “creation”– credit is created literally out of thin air (or with the stroke of a keyboard). The loan is not created out of reserves.

Detailed explanation-4: -Answer: The primary functions of a commercial bank are accepting deposits and also lending funds. Deposits are savings, current, or time deposits. Also, a commercial bank lends funds to its customers in the form of loans and advances, cash credit, overdraft and discounting of bills, etc.

Detailed explanation-5: -A commercial bank is a financial institution that provides services like loans, certificates of deposits, savings bank accounts bank overdrafts, etc. to its customers. These institutions make money by lending loans to individuals and earning interest on loans.