What do you think would happen if all the depositors went to ask for their money at the same time?
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When every depositor went to bank at same time bank will not be able to pay money to all the people bcoz bank has just have 15% of its money as cash and all the 85% cash is given to the borrowers
If all the depositors would go to banks and withdraw their money at the same time, then there will be a huge cash crisis in the banks as they will run our of money. They will not be able to give loan to markets and several companies. There will be no daily transaction in banks, so footfall will be nil. No loans can then be given as crop loans also so this will affect the agricultural produce for the impending season. Bank cash reserve ratio will also decrease drastically. It will lead to a complete collapse of the financial system.
If all the depositors would go to banks and withdraw their money at the same time, then there will be a huge cash crisis in the banks as they will run our of money. They will not be able to give loan to markets and several companies. There will be no daily transaction in banks, so footfall will be nil. No loans can then be given as crop loans also so this will affect the agricultural produce for the impending season. Bank cash reserve ratio will also decrease drastically. It will lead to a complete collapse of the financial system.