Which of the following is not included in the assets of a commercial bank in India?
[UPSC Civil Services Exam – 2019 Prelims]
(a) Advances
(b) Deposits
(c) Investments
(d) Money at call and short notice
Answer: (b)
Explanation:
- The key business of the banks is to accept different types of deposits from the public and then lend these funds to the borrowers.
- This is called Financial intermediation.
- In terms of the banks, the deposits represent the “liabilities” of the banks while loans advanced and investments made by banks represent their “assets”.
- The deposit itself is a liability owed by the bank to the depositor.
- Bank deposits refer to this liability rather than to the actual funds that have been deposited.