Introduction

Finn: Indian banks have a simple business model. They take deposits from people like us and pay us a low rate of interest. Then they lend most of these deposits out to others and earn a higher rate ofinterest. But not all of the money gets doled out as loans. The set aside sum is cash just to be safe in case of a crisis. And the rest of the money is invested in things like government bonds. It's a relatively safe investment that may not earn them the big bucks, but they can sell these bonds quickly in case of an emergency. When people see this happening, they could panic - it's called a bank run.