Question

State whether the following statement is True or False.

There is no difference between primary deposit and secondary deposit of a commercial bank. 

Options

• True

• False

Answer 1

There is no difference between primary deposit and secondary deposit of a commercial bank. - False
Explanation: The above statement is false. Primary deposits are simply cash deposits made by the general public in the bank, while secondary deposits are that part of cash deposits keeping aside the mandatory reserve as specified by the central bank. The secondary deposits are used to create credit through loans.