One profitable form of business undertaken by the commercial banks is

One profitable form of business undertaken by commercial banks is lending money to borrowers. Commercial banks earn profits by charging interest on loans that they extend to borrowers. These loans can be in the form of personal loans, mortgages, or business loans. Banks carefully evaluate the creditworthiness of borrowers and set interest rates accordingly. As long as the interest earned from the loans is higher than the cost of obtaining funds to lend, banks can earn a profit. Therefore, lending money is one of the key functions of commercial banks.