The Interest Free Banking
English Essay on "The Interest Free Banking"
A bank, primarily, deals in money. It accepts money from the public and loans it to the persons who need money to carry out their business or need to meet their urgent demands. The money that a bank gets is the surplus money that goes towards capital formation. Traders, businessmen, producers and entrepreneurs borrow from bank to direct the money to productive channel.
One is reluctant to part with one’s savings unless one is compensated for one’s sacrifice. For this, the depositor demands some extra money from the bank. To meet this demand and also the cost of the services rendered to the borrowers the bank takes back a small portion of the profits from the borrowers along with the principals. This extra money is called interest.
One is reluctant to part with one’s savings unless one is compensated for one’s sacrifice. For this, the depositor demands some extra money from the bank. To meet this demand and also the cost of the services rendered to the borrowers the bank takes back a small portion of the profits from the borrowers along with the principals. This extra money is called interest.