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Please explain

Nabeel (CA) (3288 Points)

12 December 2010

Loans create deposits and deposits creates loans.

How??????

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Ramandeep singh (CA-final,M.com (Final)) (59 Points)
Replied 12 December 2010

Dear,

It is a cycle if we have a loan we can invest it any where and create deposite by way of profit and if a bank have a deposite the bank will give loan easily

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Sharad Suman Das (art) (141 Points)
Replied 12 December 2010

Dear Nabeel,

it is a coarerlated process which explains the movement of money from one hand to another, deposits are the result of savings and the loans are the result of the deposits, because if we have saved some money we will deposit it with ny financial instution for the purpose of earning profit and on the other hand the financial instution will use the amount for thew purpose of giving loan. so the deposits and the loans are corelated to each other; "the grater ther will be amount of deposits the greater will be the amount of loan.

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(Guest)

Originally posted by : Sharad Suman Das
	Dear Nabeel, it is a coarerlated process which explains the movement of money from one hand to another, deposits are the result of savings and the loans are the result of the deposits, because if we have saved some money we will deposit it with ny financial instution for the purpose of earning profit and on the other hand the financial instution will use the amount for thew purpose of giving loan. so the deposits and the loans are corelated to each other; "the grater ther will be amount of deposits the greater will be the amount of loan.