“Deposits in the banks are beneficial to the depositors as well as to nation.” Examine the statement.

(a) Deposits are beneficial to the depositors as mentioned below:

(i) Bank accept the deposit and pay as interest rate on the deposits.

(ii) Money is safe with the bank.

(iii) People (depositor) may withdraw the money as and when they require.

(iv) Depositors may make payments through cheques instead of cash.

(b) Deposits are beneficial for the banks too as mentioned below:

(i) Banks keep only a small proportion of deposits. Now a days, banks keep you about 15 per cent as cash in order to pay the depositors who might come to withdraw money from the bank on any give day.

(ii) Bank use the major portion of the deposits to extend loans. There is huge demand for loans for various economic activities. Banks make use of the deposits to meet the loan requirements of the people. Businessmen and other entrepreneurs take loan s from the bank and open the factories. They help in the advancement of the economy. Thus the deposits are beneficial to the nation.