Liquidity

A banker must see whatever amount he is investing and wherever investing the liquidity of funds is necessary to be maintained. Liquidity means the amount invested must be always available on demand by the bank. In case of emergency of cash demand the banks should be able to count upon the investment to be turned into cash to meet the immediate and urgent need of cash. If the investment is not liquid enough the bank may find itself in difficult conditions which may lead to the end of the bank itself. A banker must not invest its money to immovable assets. According to M.I Tannan, a banker must understand the differences between investment and mortgages.