Friends, have you ever thought how banks earn money?
Today's topic is about this only
Hello friends, I am Sahil Khanna and you are watching Intellectual Indies
Today we will understand about banking sector and how they earn money
Let's assume you have 1 lakh amount of money
You invested 1 lakh in bank and you didn't do any withdrawal
How much rate of return you get? 4%
So it becomes Rs.4000
So bank is giving you Rs.4000
Bank gives that same money as loan to someone and take 12% return
So the remaining 8% becomes profit of the bank
So is it the only earning way for bank?
Banks also have indirect ways of earning
Like transaction fees, atm fees, card fees, late fee, charge on cheque bounce
So there are indirect ways through which banks earn money for their expenses
So bank is profitable over 7-8%
So if banks are left with lot of money and no loan takes place, then what do they do?
Banks invest in mutual funds, bonds, from where they can get better rate of return
Banks invest in itself so that they can open more branches and expand their business
So guys, this topic ends here, "How bank earn money"
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