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.)