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Banks are making profits through the Deposits and Loans.
Giving Interest on lower rates to the Deposits.
Charging Interest on Higher rates to the Loans.
Inbetween is the Profit to the Bank and all the adminstrative expenses are covered by the charges.
Mysore king
There are two ways of income for a bank one is direct income and second is indirect income , The bank gets income through the difference in lending and deposit rate ( considered as direct income) and secondly it gets income though sale of other products in the financial sector like Insurance M.F etc, Bank also get revenue through DD,Currency Exchange etc. Apart from all these the bank get income from their investment in the govt. bond and MMI which all banks has to satisfy for meeting their SLR
wisdominknowledge
interest on deposits and loans
investment returns (they invest all that money)
fees
Sanjeev Kumar Vyas
They take money from us and give it as loans to others.
They pay us a lower interest rate compared to what they get from the money they have loaned and thus making profit in the process.
V K B
Follow the following practical procedure and know yourself how bank make profit.
a) Open a saving account in the first week of any month and put up there (say Rs. One Lakh) any amount you can spare.
b) On last day of the month you place all sum (leaving behind the minimum balance as per norm of that bank) into a FIXED DEPOSIT.
c) Next week you approach the bank and get sanctioned loan for your needs by pledging the FIXED DEPOSITS as security.
d) After some time (say 6 months) you will come to know how the bank make profit. You will see that you are getting nothing but the bank itself is 'benefitting' from your money and from you.
e) Also you will come to know that self-experience is always better than asking such hanky-panky question.
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