Question

Which item shows the biggest amount on the income side of the bank’s Profit and Loss Account?

Hint:

Remember: Banks earn the most from interest on loans — it’s their main business!

Answer 1

Banks primarily earn income by lending money to borrowers and charging them interest on loans and advances.
This interest income forms the largest portion of a bank’s total income and is the biggest entry on the income side of its Profit and Loss Account.
Other sources like service charges, commission, and investment income do contribute, but they are usually much smaller than the interest earned.
Banks lend to individuals, businesses, and governments and collect interest payments over time, which is a stable and significant source of revenue.
That’s why monitoring the quality of loans is so important — NPAs affect this core income directly.
Therefore, the correct answer is ‘Interest earned on advances and loans’.