What are the major sources of revenue for Commercial Banks?

What are the major sources of revenue for Commercial Banks?

Sources of income of commercial banks –

1- Interest on Loans

  • Banks provide loans to individuals, industries, and corporates, the interest coming from there being the biggest source of revenue for banks. 
  • The simple business model of the bank is to earn interest by giving loans, which is why interest-earning is the biggest source of income for banks.

2- Returns on Investments

  • Banks invest in Government Securities and Gold and generate returns from these Investments.

3- Fee-Based income

  • Banks provide different types of services, for which they charge a fee.
  • Some Examples – Account Maintenance Fee, Credit Card fee, Custodian Fee, Penalty, and Investment Management Fee.

Earn Commission on third-party Products

  • Banks also earn a commission from third-party insurance companies’ insurance products and mutual fund products.

From Forex Exchange

  • Banks also make money from foreign currency exchange, suppose you go abroad and you exchange currency and from there, banks take a commission from you.
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