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explain loan activities of bank .

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. banks provide loans for various economic activities

2. banks keep only a small propotions of the deposits with them as cash

3. these deposits are used to meet the loan requirement

4. bank intermediates between those who have surplus funds and those who are in need of these funds.

5. bank offer very less interest on deposits than what they demand on loans

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Banks provide loans to people at some interest rate.
 Banks keep only 15% of their total deposits as cash to meet the day-to-day withdrawal demands.
 Rest of the cash is extended as loans to those who need it (borrowers) at a specific rate of interest.
 The interest provided by banks to depositors is less than the interest charged by banks from borrowers on loans.
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