The purpose of a bank

If you’re planning to play around the method of offshore earning or offshore company formation in Dubai, Qatar or any UAE’s state, you should learn the mechanism of banks first because your business includes bank. You’re responsible for the usage of your bank account just like the power of attorney is responsible for permitting you to do business.

Such institution is a financial institution that borrows and lends money. Banks receive an annual interest rate in exchange for their customers ‘ deposits. The Bank uses the bulk of these deposits to lend a number of loans to other customers. The disparity between the two rates is the profit margin for banks. In the economy, banking plays a major role within offering a service to savings. Banks also contribute significantly to providing funding for companies that want to grow and develop.  Such loans and corporate investments are vital for economic growth.

The purpose of a bank is protecting peoples’ wealth as banks are known as a safe deposit spot. It would be unworkable and dangerous to keep all your savings under your bed in cash. Modern banks (e. g. Templar knights) are often used to pay to save money and goods in the medieval times. It also saves money-conscious people. Commercial banks in the United Kingdom are guaranteed last resort by the Bank of England. Consumers therefore regard it as safe places to deposit money.

Trade banks are known to be paying deposit interest. Such event can be minor for current accounts, but the rate of interest can be high for saving accounts. During an inflationary period, the rate of interest on deposits is very important to preserve your savings ‘ real value. If inflation is 4%, the value of money would decline where cash is stored, for example. Nevertheless, the real value of your savings would rise if your bank pays a 6% interest rate. Interest payments on your savings accounts can be a significant source of income for some clients, such as pensioners.

By using a percentage of its deposits, a bank can become more profitable for lending to other customers. If a bank pays 2% for bank deposits but gives money to businesses and consumers to 6%, it can make greater profit from its deposits. To order to meet customers ‘ demands for withdrawal, a bank just needs adequate liquidity.

Bank loans range from unsecured personal loans to guaranteed loans. Because of the risk factor, unsecured loans often have a higher interest rate. The loan guaranteed is lower, but it may last for more than 30 years. Visit for further details.