The business of banking is simple. 1) Borrow cheap 2) Lend high 3) Grow at high rate 4) Recover the money lent. The basics of these facets are briefly discussed below: –
1) BORROW CHEAP
- Current & Savings Accounts (CASA) and Market Borrowings are the main sources of funds for banks. CASA accounts are a relatively cheaper source of borrowing for banks since current accounts carry nil interest and savings bank rates are low. Market borrowings rates move in line with interest rates of the economy.
