Question

Distinguish between primary deposits and secondary (derivative) deposits.

Answer 1

Basis	Primary Deposits	Secondary Deposits
1. Meaning	Primary deposits are cash deposits with the commercial banks by the people.	Secondary deposits are those deposits which arise due to loans given by the banks to the people.
2. Occurance	Primary deposits take place in all types of bank accounts.	Secondary deposits take place in all types of accounts except fixed deposit accounts.
3. Alternative Name	They are called passive deposits or initial deposits because the banks role in creating such deposits is passive.	They are called derivative deposits or active deposits. Banks play an active role in the creation of such deposits.