AI-generated practice question — model-generated for extra practice, not a previous-year CBSE board question.
Not all depositors withdraw money on the same day, so banks manage with only a small cash reserve (about 15% in India) to meet daily withdrawal demands.
Source: Money and Credit, Loan Activities of Banks
The examiner wants one clear reason: withdrawals on any given day come from only some depositors, not all at once. Mention the small cash reserve kept for this purpose. Avoid writing more than one or two lines for a 1-mark answer.