Diversified Income Strategies of Banking Business
JAYESH S V, Dr K Sevugan
The Indian financial system is at the heart of the economy. Banks, as the key in the system are significant to economic growth and also contributed to development of our country. The banks are channels in the payment system with a range from cash to negotiable instrument to electronic payments. This way banks helps businessmen, households, governments etc to connect to the financial system. The money accepted by the bank for lending either for short term or for long term tenure from public. For that purpose they have to pay interest and receiving income as interest from loans and advances. This interest is the main source of income to all types of banking businesses. So banks are maintaining their loans and advances in good condition to receive regular interest income. As far as the term deposits of banks are considered, they have to pay regular interest income without any fail. It means interest expended is a routine expenditure for the banks. But in the case of advances are considered there may be some defaulters. This will result in the shortage of income for banks and financial institutions on interest received. As the interest income coming downwards it will reflect in Profit and Loss Account and future of banking business. Whenever these types of income shortages are familiar in banks, they have to compel to generate various incomes other than interest income. This will lead to create different types of bank charges from bank’s end. Then only they can withstand in the banking market.
Article Details
Unique Paper ID: 152547

Publication Volume & Issue: Volume 8, Issue 3

Page(s): 706 - 707
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