Advantages and Disadvantages of Banks in 2023: NAAZ BANKING

Advantages and Disadvantages of Banks in 2023

At present, banks have a very important place from the point of view of economic development. For all types of economies, whether they are developed economies or developing economies, they all require banks. Banks act like the blood of an economy.

Banking system is called the soul of the economic world. The development of any country, its production, trade-business and industry-business etc. all depend on banking development. Economic development of any country is not possible without the cooperation of banks.

Following are the major advantages of banks which are being explained in this article in 2023

1. Managing finance for trade and industries 2023

Banks manage money for industries and business operations. At present, a large amount of capital is required in industries and business. It is not possible to operate industries and business without capital. Banks collect extra money from their customers and lend money for industrial and commercial purposes. Due to this people’s extra money gets used in production works. Industrialists and traders get sufficient finance through the bank and the customers depositing money in the bank also get unfair interest. Due to which bank customers are benefited.

2. Promotion of savings 2023

Banks encourage you to inculcate the habit of savings. Banks collect your small savings and pay interest on the deposited amount. The temptation of interest increases your tendency to save. This puts a check on wasteful expenditure. Banks provide finance for industries and business by collecting small savings from their customers. Due to which industries and business are supplied with money.

3. Elasticity in the Monetary System 2023

Banks create credit by collecting money from their customers, due to which the supply of money in industries and businesses can be reduced or increased as per the requirement. Due to the establishment of balance in supply and demand of money in industries and businesses, stability in prices also remains. That is why banks contribute to price stability by providing flexibility to the currency system.

4. Capital formation 2023

Banks meet the financial needs of industrialists and businessmen by collecting small savings and scattered savings from their customers. Banks create credit by increasing their deposits through their customers. This credit and finance received from its customers acts as capital for the industries. Banks help in capital formation by collecting idle and scattered money and investing it in capital formation works.

5. Money Transfer Facility 2023

Banks help in sending money from one place to another. This reduces the risk and costs a lot less than sending money through a bank.

6. Mobility of Capital 2023

Banks provide mobility to any capital. Any capitalist wants to invest his capital in such works where his risk is less and his profit is more. Banks provide complete security of any capital and also give reasonable returns to the customer. Due to this capital is removed from less useful place and after that it is used in more useful and productive work. Due to this, production, industry, employment, and income etc. of a country increase and economic development also happens very fast.

7. Representation and Consultant 2023

The activities carried out by the bank are very useful for the industrialists and businessmen. Banks provide their cheap services to industrialists and businessmen by working as their representatives and advisors. This saves time and labor of industrialists and traders. Due to which it has become easy to run the industry and business efficiently.

8. State Finance System 2023

Banks also provide loans to the government. And play an important role in arranging government loans. Banks also provide their financial advice and financial assistance to the government when required. The profit earned by the banks can be used by the government to meet its financial needs if needed. That is why banks also arrange finance in the public sector.

9. Increase in Employment 2023

In the present times, due to the development of banking activities, industrial and commercial activities have expanded at a higher level. Banks have paved the way for the economic development of our country. With the expansion of industry, trade, banking services, etc., employment opportunities have increased in the country.

10. Development of Banking Trend 2023

Due to the development of banks, banking instinct has developed in common people. At present, instead of using metal currency and paper currency, letters of credit are used by people in mutual transactions. This has greatly reduced the need for legal tender. Due to non-circulation of metal coins, the loss due to wear and tear of that metal has been stopped. Which directly affects the economy of a country.

In the modern era, if there are no banks, then the activities of industry and trade will be very limited and controlled, economic development will be very less and employment opportunities will also be very less. Apart from this, the economy will become stagnant. So banks are very important for the economic development of the country.

The following defects will arise from the banks 2023-

1. There will be a possibility of promoting dictatorship in banks.

2. Dissatisfaction may arise among bank employees and they may protest openly.

3. The fulfillment of the social objective of the bank government will not be operated properly.

4. Banks can be limited to some big houses in order to earn maximum profits.

5 Bank would like to earn maximum interest on loan instead of giving loan to common people at reasonable prices.

6. Banks will give more importance to their branches only in cities, due to which the people of marginal rural areas may face hindrance in banking facilities.

7. The general public may have to maintain a minimum balance in their account in the form of a lumpsum.

8. Banks can be closed if they are not operated properly, due to which the money deposited by the general public can be drowned.

The above article content is for informational purposes only. The contents are general in nature and are for informational purposes only. It is not a substitute for advice specific to your own circumstances. shall not be responsible for any direct/indirect loss or liability incurred by the reader for taking any financial decision based on the information. Please consult your financial advisor before making any financial decisions.

Leave a Comment