Customize Consent Preferences

We use cookies to help you navigate efficiently and perform certain functions. You will find detailed information about all cookies under each consent category below.

The cookies that are categorized as "Necessary" are stored on your browser as they are essential for enabling the basic functionalities of the site. ... 

Always Active

Necessary cookies are required to enable the basic features of this site, such as providing secure log-in or adjusting your consent preferences. These cookies do not store any personally identifiable data.

No cookies to display.

Functional cookies help perform certain functionalities like sharing the content of the website on social media platforms, collecting feedback, and other third-party features.

No cookies to display.

Analytical cookies are used to understand how visitors interact with the website. These cookies help provide information on metrics such as the number of visitors, bounce rate, traffic source, etc.

No cookies to display.

Performance cookies are used to understand and analyze the key performance indexes of the website which helps in delivering a better user experience for the visitors.

No cookies to display.

Advertisement cookies are used to provide visitors with customized advertisements based on the pages you visited previously and to analyze the effectiveness of the ad campaigns.

No cookies to display.

Skip to content
Home » What is the business of banking?

What is the business of banking?

The essence of banking lies in its core operations, which revolve around two fundamental activities: taking deposits and providing loans. When individuals or companies have excess funds, they turn to commercial banks to securely deposit their money. On the other hand, those in need of financial assistance approach banks for lending services.

Commercial banks serve as the intermediaries between those with savings and those in need of capital. By collecting deposits, banks offer a safe haven for funds, allowing depositors to earn interest while keeping their money secure. These funds, in turn, are utilized to provide loans to borrowers, ranging from individuals seeking home mortgages to businesses in need of expansion capital.

The business of banking is essentially a cycle of funds—taking in deposits and channeling them into lending activities. Through this process, banks facilitate the flow of money in the economy, supporting savings and investment. They play a crucial role in financial stability and economic growth, acting as the engine that keeps capital circulating and businesses and individuals financially viable.

(Response: The business of banking revolves around two core activities: taking deposits from those with surplus funds and lending to those in need. Banks act as intermediaries, providing a safe place for deposits while also offering loans to individuals and businesses. This cycle of funds supports economic growth and financial stability.)