Banks mediate between those who have surplus money and those who need money primarily by accepting deposits from people who have extra funds and paying them interest on these deposits. Banks maintain only a small portion of these deposits in cash (around 15%) to meet withdrawal demands. The majority of the deposited money is then loaned out to people who need funds, charging them a higher interest rate. The difference between the interest paid to depositors and the interest charged from borrowers is a key source of income for banks. This process allows banks to act as intermediaries, facilitating the flow of money from savers to borrowers and supporting economic activities.