22 August 2013
why does a bank accept current account deposits? because it cannot further invest that sum cause it always has to keep that amount ready for meeting withdrawals.. so apart from earning from the overdrafts (which I think are very unusual, pls correct me if I'm wrong) what does the bank get by keeping current accounts ? does it charge any amount separately from current acc holders for this service and for keeping their money in safe custody ?
22 August 2013
Thank you sir for your answer.. but i had one doubt.. how is it beneficial to the bank when it cannot invest that money anywhere (so there is no question of interest) but it has to keep the cash ready in hand all the time
22 August 2013
No they can invest the amount on liquid assets
besides these bank has to maintain cash reserve ratio (CRR) on the basis of deposit, if they do not invest the amount on l liquid assets, it can be used for maintaining CRR
CAclubindia
