Impact on Balance Sheet of Banks by Paying Daily interest on Saving

After paying daily interest on saving accounts, banks’ balance sheet will be affected from this. Interest on saving account is expense of banking business which reduces net profit which is shown in reserve and surplus in the liability side of balance sheet of bank.

On the other side, by increasing total amount of interest due to this reason, cash balance in the balance sheet will reduce. So, Bank has to make new working capital policy in long run. But this decision can increase the amount of saving means more cash inflow may be added because customer may feel enjoy high earning with security on saving account.

It can also affect loan amount in balance sheet of banks because if bank will not receive high saving cash after this, bank’s cash balance will reduce due to paying daily cash and we can see some less amount of loan in next balance sheet. But all most, there will not very high impact on the balance sheet of banks by paying daily interest on saving.
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Education of Accounting : Impact on Balance Sheet of Banks by Paying Daily interest on Saving
Impact on Balance Sheet of Banks by Paying Daily interest on Saving
Education of Accounting
http://education.svtuition.org/2010/10/impact-on-balance-sheet-of-banks-by.html
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http://education.svtuition.org/2010/10/impact-on-balance-sheet-of-banks-by.html
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