Role of banks in the economic development essay

Essay on the Role of Commercial Banks in Economic Development Article shared by Commercial banks play a significant role in economic development of less developed countries like India. Helpful in Mobilisation of Savings and Capital Formation:

Role of banks in the economic development essay

The role of banks in economic development is to remove the deficiency of capital by stimulating savings and investment. A sound banking system mobilizes the small and scattered savings of the community, and makes them available for investment in productive enterprises.

In any plan of economic development, capital occupies a position of strategic importance. No economic development of sizable magnitude is possible unless there is an adequate degree of capital formation. A very important characteristic of an under-developed economy is deficiency of capital which is the result of insufficient savings made by the community.

InColin Clark, estimating the capital needs of China, India and Pakistan, pointed out that they must save In the under-developed countries, not only is the capital stock extremely small but, as pointed out above, the current rate of capital formation is also very low.

The serious capital deficiency in under-developed countries is reflected in the small amount of capital equipment per worker and in limited knowledge, training and scientific advance. These are serious handicaps in economic development and here the banks can play a useful role: In this connection, the banks perform two important functions: In this way, they promote the development of agriculture, trade and industry.

It is difficult to see how, in the absence of banks, could small savings be stimulated or even made possible. It is also difficult to see who would distribute these savings among entrepreneurs.

Role of banks in the economic development essay

The banks exercise a degree of discrimination which not only ensures their own safety but which makes for optimum utilization of the financial resources of the community. We see that in India the period of economic development has coincided with a phenomenal increase in bank deposits—and bank offices.

Thus, the banks have come to play a dominant and useful role in promoting economic development by- mobilising the financial resources of the community and by making them flow into the desired channels.

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The Indian banks are now playing a very active role in fostering economic development of the country.The Role of Finance in the Economy: Implications for Structural banks are central to the financial system. In addition to providing substantial Credit fuels economic activity by allowing.

The banking system plays one of the most crucial roles in the global economic system. The banks act as the intermediary in between the depositors and the borrowers of an economy. Role of Commercial Banks in the Economic Development of a Country: Commercial banks are one of the three primary agents which help circulating funds in the market.

Commercial banks provide loans and corporate bonds to the households, new start ups and small medium enterprises to run their businesses.

Essay on the Role of Banks in Economic Development

Role of Commercial Banks in the Economic Development of a Country: Commercial banks are one of the three primary agents which help circulating funds in the market. Commercial banks provide loans and corporate bonds to the households, new start ups and small medium enterprises to run their businesses.

Role of Banks in the Economic Development Essay from public repayable on demand and can be withdrawn by checks, draft order and so on.

Role of banks in the economic development essay

Banking Company: Any company, which transacts the business of banking Banking System: Banking System is a principal mechanism through which the money supply of the country is created and controlled.

How Insurance Sector promotes Economic Development Insurance including insurance brokers promote economic development through various channels: Insurance reduces the waste of country and brings a market confidence.

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Role of Banks in the Development of Indian Economy