Monday, 28 January 2013

WHAT IS BANK & ITS ROLE


What is Bank?

  • A bank is a financial organization where people deposit their money to keep it safe. 
  • That’s only part of how a bank works, though.

    A bank is a business like a video store, a restaurant, or a skating rink.


    Look at the diagram below, you will see an example of how a bank earns enough money to stay in business. 



 In the diagram, on the left, there is a simple picture to show that how this works. 
  •    Let’s say that you put 1000 in your savings account in the bank. 

          The bank will loan your 1000rs (along with lots of other people’s money) to people who want to buy a house, car, boat, or start a new business and don’t have enough money to do it on their own. 




    When those people start to pay the money back, they PAY interest that is higher than what you will EARN on your money.  

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