A deposit represents funds placed by an account holder into a financial institution, creating a liability for the bank and an asset for the customer who retains the right to withdraw the money. Conversely, a loan represents borrowed capital extended by a financial institution to a borrower, creating an asset for the bank and a liability for the borrower who is legally obligated to repay the principal amount alongside accumulated interest over an established repayment schedule. Deposits form the fundamental liability foundation that banks utilize to generate liquidity, whereas loans serve as the primary income-generating asset through which banks earn interest revenue. While deposits allow individuals and businesses to store and secure their wealth safely, loans provide immediate capital injections required to finance major purchases, business expansions, or long-term investments.