Importance of Banks in the Development of A Country

Author:
icv
Updated date:
Jul 31, 2017

Irshad completed B.A in Economics. He has special interest in dealing with Money and Banking

Banks are dealing with many macro economic indicators. So they can largely influence the economic matters of a country

Banks are one of the most important parts of any country. In this modern time money and its necessity is very important. A developed financial system of the country can ensure scope for attaining economic development. A modern bank provides valuable services to a country. To attain development there should be a good developed financial system to support not only the economic but also the society. So, a modern bank plays a vital role in the socio economic matters of the country. Some of the important role of banks in the development of a country is briefly mentioned below.

I- Promote Saving Habits among People

Bank attracts depositors by introducing attractive deposit schemes and providing rewards or return in the form of interest. Banks providing different kinds of deposit schemes to its customers. It enables to create banking habits or saving habits among people.

II- Capital Formation and Promoting of Industries

Capital is one of the most important parts of any business or industry. It is the lifeblood of business. Banks are helpful to increase capital formation by collecting deposits from depositors and converting these deposits in to loans and advances to industries.

III- Easiness of Trade and Commerce Functions

In this modern era trade and commerce plays vital role between any countries. So, the money transaction should be user friendly. A modern bank helps its customers to sent funds to anywhere and receive funds from anywhere of the world. A well developed banking system provides various attractive services like mobile banking, internet banking, debit cards, credit cards etc. These kinds of services fasten and easing the transactions. So, bank helps to develop trade and commerce.

IV- Generate Employment Opportunities

Since a bank promotes industry and investment, they automatically generate employment opportunity. So, a bank enables an economy to generate employment opportunity.

importance-of-banks-in-the-development-of-the-counrty

V- Promote Agricultural Development

Agricultural sector is one of the integral parts of any economy. Food self sufficiency is the major challenge and goal of any country. Modern banks promotes agricultural sector by providing loans and advances with low rate of interest compared to other loans and advances schemes.

VI- Implementation of Monetary Policy

Monetary policy is an important policy of any government. The major aim of monetary policy is to stabilize financial system of the country from the dangerous of inflation, deflation, crisis etc. Banks are helpful to implement policies relating to monetary matters successfully.

VII- Balanced Development

Modern banks are spreading its operations throughout the world. We can see number of big banks like Citi bank, Baroda bank etc. It helps a country to spread banking activities in rural and semi urban areas. With the spreading of banking operations around the country, they help to attain balanced development by promoting rural areas.

Modern bank plays vital role in the social- economic development of the country. A developed banking system enables the country to attain balanced development without any special consideration of rich and poor, cities and rural areas etc.