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What are the major sources of increasing capital for a bank? List and explain. ?

What are the major sources of increasing capital for a bank? List and explain. ?

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Answer #1

Bank increases there capital from various sources. SOme of them are listed below -

  1. Deposits - The largest source by far of funds for banks is deposits. Money that account holders Keep with the bank for safekeeping and use in future transactions

  2. Equity - Common equity is straight forward. This is capital that the bank has raised by selling shares to outside investors.

  3. Debt - Bank also issue debt to fulfill there funding needs.

  4. Borrowing from other large bank - In case when needed bank also seek loan from other bank at the interest rate prevaling notified by the regulatory authority.

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