quite easy, The bank is dependent on two things.
Keeping excess money with people safe
- Providing money to people when they need money
- To give interest to the people on their deposits. and charge interest on the amount given.
When a bank gives a credit card facility to someone, then after a certain time, it charges interest on that facility. This is the advantage of the bank. The bank charges interest on the credit card when the time period specified by that bank is over. This interest is the date of earning of the bank. The bank does not open for the purpose of donating or helping. Where money is involved there is always a system. Not only private banks, but also public sector banks (like SBI) are running like businesses. Like the bank you came to, they have only one benefit in each sms scheme. Profits, obviously.
Yes, banks have quarterly, yearly and many other such targets. But all of them maintain interest with the customers. Our money is safe in the bank, this is a proven and legal system. The question is how banks make money. Money saved is money. It is the most fundamental way that banks make money. If you deposit some money in a savings account, the bank uses your money to make a loan.
Let us say that the customer deposits Rs 10 crore in the bank as savings. The bank promises to pay them 4% interest. When the bank lends money, it charges an interest of 10-12%. Therefore, the total interest of the bank giving Rs 12 crores to individuals and/or businesses is more than the interest to customers. This is simple math.
Interest at 4% of 10 Crore: 40,00,000/- (Forty Lakh)
And the bank gives 10 to 12%,
10% of 10 Crore 1,00,00,000/- (Rupees One Crore)
Direct profit 60 lakhs. There are many other schemes which give profit to the bank.
Now you probably understand the reason why banks offer lower interest rates on savings, fixed deposits, recurring deposits, etc., and charge higher interest rates on mortgages or education loans.
Apart from this, there are many types of charges, such as,
sms charge,
check book charge,
DD processing fee,
Penalty for not maintaining minimum balance
Charges for bounce of check
debit card charges,
credit card charges,
Charges for withdrawing money from other ATMs,
(this is the usual charge)
All these are very profitable charges for them.