Which of the following is NOT a liability of a commercial bank?

The correct answer is - Loans given to customers

Key Points

• Loans given to customers
  • This refers to the money lent by a bank to individuals or businesses.
  • Loans are considered assets of a commercial bank because they generate income through interest.
  • Unlike deposits, loans represent the bank's use of funds rather than sources of funds.

Additional Information

• Demand deposits
  • These are funds deposited in a bank account that can be withdrawn without any advance notice, such as a checking account.
  • They are considered liabilities because the bank owes this money to the depositors.
• Fixed deposits
  • These are deposits that are made for a fixed period and usually offer higher interest rates.
  • They are also considered liabilities because the bank is obligated to return the money to the depositors after the fixed period.
• Savings deposits
  • These are deposits in a savings account where the funds can earn interest but have some limitations on withdrawals.
  • Savings deposits are liabilities for the bank since it owes these funds to the depositors.