A bank is a financial institution that collects funds from the public in the form of deposits and then redistributes them in the form of credit or financing. By collecting funds from the public and redistributing them in the form of credit or financing, banks help create capital circulation that supports various business sectors. In modern life, banks not only function as a place to store money but also play a vital role in supporting the economy through credit distribution and supporting social activities such as money exchange services. Banks also minimize the risk of damage or loss of currency.
Banks play a crucial role in today’s society. The primary function of banks is to collect funds from the public in the form of deposits, savings, checking accounts, and time deposits, and then redistribute these funds back to the public in the form of credit or loans. This also aims to support equity, economic growth, and national stability, leading to improved public welfare. Banks play a role in improving public welfare by providing resources for working capital, investment, and consumption. The primary role of banks is to manage money, lend it, and assist the public. People can make payments, transfers, and other transactions more easily and securely through banks. Banks generate income through interest income from loans, as well as non-interest income such as transfer fees and account administration fees. Banks also invest their funds and participate in capital markets to generate income. Furthermore, banks manage funds collected from customers to redistribute them as credit or loans.
Banks generate income from loans; they earn substantial profits from interest on various types of loans, such as personal loans and small business loans. Interest rates on these loans are typically higher than those offered by banks for deposits. They also generate income from credit cards. Credit cards generate another significant source of income for banks, through interest and fees, such as late payments. They also profit from fees charged at stores when paying with a credit card.
In conclusion, banks play a crucial role in modern society, not only as a place to save money but also as an institution supporting the economy. The role of banks in society is inseparable from everyday life. Banks are not only places where we save or deposit money, but also serve as a link between people with excess funds and individuals or institutions that need capital. From there, banks can generate income, for example through loan interest, administration fees, and other financial services. This allows them to survive while also helping the community drive the economy.
Furthermore, banks also contribute significantly to maintaining economic stability. Imagine if there were no banks, it would be difficult for many individuals and companies to start or expand their businesses. Banks provide a way for money to circulate and the economy to grow. In my opinion, the more we understand how banks function and generate profits, the easier it will be for us to use their services wisely. Ultimately, banks and society depend on each other. The community needs banks to support financial activities, while banks need public trust to continue operating.
By: Almira Myiesha Nafeeza Dianartha
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