Multiple choice

In banking parlance, what is meant by spread?

  1. Difference between total income and expenditure

  2. Difference between interest on advances and interest on investments

  3. Difference between maximum rate of interest paid on deposits and maximum rate of interest charged on advances

  4. Difference between interest on loans and advances, investments, balances with RBI and interest paid on deposits
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

In banking, 'spread' refers to the difference between interest income earned on assets (loans, advances, investments, and balances with RBI) and interest expense paid on liabilities (deposits). This represents the bank's net interest margin or profit from its core lending operations. Option D correctly captures this comprehensive definition including all interest-bearing assets.

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