Smart things to know about sources of income for a bank

1 Interest on loans:
Banks provide various loans and advances to industries, corporates and individuals. The interest received on these loans is their main source of income.

2 Interest on investments:
Banks invest in various government and rated securities, and earn interest and dividends from these investments.

3 Fees income:
Banks charge fees for performing services like syndication of loans, accepting bills of exchange, providing safety vaults, etc. for their customers.

4 Forex operations:
Banks also deal in foreign exchange and act as brokers for the same, earning an income from these operations.

5 Commission on third party products:
Banks earn commission income by distributing insurance and mutual fund products to their customer base.

(The content on this page is courtesy Centre for Investment Education and Learning (CIEL). Contributions by Girija Gadre, Arti Bhargava and Labdhi Mehta.)