How do banks work?
In this lesson you'll learn:
- Understand what a bank does with your money
- Learn what "interest" is and why banks pay it to you
A bank is like a giant, super-safe digital vault. When grown-ups earn money, they deposit it into a bank account where it stays 100% secure.
🏦 The Great Banking Cycle
1. You Deposit
You put ₹1,000 in your savings account.
2. Bank Lends
Bank loans money to someone building a home or shop.
3. Borrower Pays
Borrower repays the loan + 9% interest to bank.
4. You Earn Interest
Bank shares interest back with you! (e.g. 4-7%).
Why does the bank pay you?
Because you let the bank use your money while you aren't spending it, the bank pays you interest. So if you deposit ₹10,000 at 6% per year, you get ₹600 extra at the end of the year without doing any physical work!
Quick check
1. What does a bank mainly do with the money you put in?
2. What is "interest"?
3. You put ₹2,000 in a bank that pays 10% interest per year. What do you have after one year?
Checkpoint locked
Score at least 60% on the quiz above to unlock the next lesson.