Investment of funds

The main motive of bank is to earn profit from collected deposit .Collected deposit is invest in productive sector so that they can pay interest to depositors. Bank is pool gap between lending and investing. The bank invest their surplus fund in different sectors but mainly in securities .like government securities, corporate securities and others securities. Government securities are securities of both central and state governments such as Treasury bill, long term government bond, municipal bonds, etc. Bank also purchase securities issue by corporate sectors. For e.g. corporate bonds, preferred stock and common stock, etc. Banks also invest their fund in hydro power, land and housing, vehicle, Bank also plays important role in development of trade and commerce.
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