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Components of assets and liabilities in banks balance sheet and their management
What are the two broad sides of a bank's balance sheet?
A bank's balance sheet has two sides: the liabilities side (sources of funds) comprising capital, reserves, deposits, and borrowings; and the assets side (uses of funds) comprising loans, investments, cash, and fixed assets.
What does the liability side of a bank's balance sheet primarily represent?
Sources of funds: deposits, borrowings, and capital.
Which component of a bank's liabilities represents the owners' stake?
Capital and reserves represent the owners' stake, forming the net worth of the bank. This includes paid-up capital, share premium, statutory reserves, and retained earnings.
What is meant by 'demand deposits' in a bank's balance sheet?
Deposits repayable on demand without prior notice.
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