(i) Payment of interest by a firm to a bank:- Included – Treated as factor payment by the firm because the firm borrows money for carrying out production and therefore included in National Income.
(ii) Payment of interest by a bank to an individual:- Included- treated as a factor payment because bank borrows for carrying out banking services and therefore included in NI.
(iii) Payment of interest by an individual to a bank:- Not Included- because the individual borrows for consumption and not for production.
