Question

Bank give loans from:

• A. Deposits collected from customers.
• B. Self-help group members accounts.
• C. Interest payments by customers.
• D. Service charges paid by customers.

Hint:

Banks accept deposits and lend a portion of those deposits as loans.

Answer 1

The Correct Option is A

Concept: Commercial banks function as financial intermediaries. They collect deposits from the public and lend a portion of those deposits to borrowers.

Step 1: Understand bank deposits. People deposit money in banks through:

• Savings accounts.

• Current accounts.

• Fixed deposits.

• Recurring deposits.
These deposits become a major source of funds for banks.

Step 2: Loan creation process. Banks lend part of the deposited funds to:

• Farmers.

• Businessmen.

• Industries.

• Individuals.
Interest earned from loans becomes a major source of income for banks.

Step 3: Analyze other options. Interest payments and service charges are sources of income but not the primary fund used for lending. Self-help group accounts represent only a small category of deposits.

Step 4: Conclusion. Banks mainly provide loans from deposits collected from customers. Hence, option (A) is correct.