Bankable Funds

Bankable funds refer to cash or assets that a bank can easily accept and use to meet its liquidity requirements or provide as security for loans.

Example

A bank might hold U.S. Treasury bonds as bankable funds because they can be easily sold or used as collateral due to their high liquidity and low risk.

Key points

• Refers to assets that are highly liquid and easily convertible to cash.

• Includes cash, government securities, and marketable securities.

• Essential for maintaining a bank’s liquidity and meeting financial obligations.

Quick Answers to Curious Questions

Why are bankable funds important for banks?

They ensure that a bank has the liquidity needed to meet withdrawals and other obligations.

What qualifies as bankable funds?

Bankable funds typically include cash, government bonds, and other marketable securities that can be quickly liquidated.

How do bankable funds affect a bank’s operations?

They provide the necessary liquidity for daily operations, allowing the bank to function smoothly and meet customer demands.