Is payment of interest by banks to its depositors included/excluded in National Income?
Is payment of interest by banks to its depositors included/excluded in National Income?
Anurag Pathak Changed status to publish December 9, 2023
Yes,
Payment of interest by banks to its depositors will be included in the national income as such interest is paid on loans taken for production purposes. It is a factory payment by a producer.
Explanation:-
Banks lend the money of the depositors to the producers and earn the interest. a portion of this interest paid to the depositors in return.
It adds to the current flow of goods and services in the economy.
In other words, the money of the depositor is used for productive purposes.
Thus interest paid by the bank to the depositors will be included in the national income.
Anurag Pathak Changed status to publish December 9, 2023
