Banking system has a very important contribution in strengthening the economy of any country. At present, banks as the most important part of the money market are important tools for the progress of the country. Their role is most important in the management of bank capital formation, trade, industry and agriculture and in the implementation of economic and social policies of a country.
RELATED ARTICLE – What is current account in 2023?
The importance of banks is being explained in this article as follows in 2023:
(1) Control of credit 2023
If a business is to run smoothly, it is very important to have a balance between the demand for credit for business needs and the amount of available credit or supply of credit, otherwise changes in the value of currency will have a serious impact on the country’s economy. falls on Commercial banks create credit for trade and the central bank of the country controls the credit in that country.
(2) Catalysts of Socio-Economic Progress 2023:
Modern banks perform many other important functions in addition to traditional banking services. The participation of banks in the programs of economic development and socio-economic progress of the country is increasing. Development is the new dimension of banking business.
After the nationalization of major commercial banks, the participation of commercial banks became more important in poverty alleviation, self-employment schemes, programs for upliftment of backward classes, development of small and cottage industries and handicrafts, rural development, industrial development, import-export trade etc. Is . At present, commercial banks are no more commercial institutions that lend money only by accepting deposits. They have now become an important source of socio-economic progress.
(3) Operation of the Monetary System 2023:
The central bank of the country issues paper currency and also operates the currency system as per the instructions of the central government.
(4) Creation of Credit 2023:
At present, credit is an important pillar of the modern economy. Most of the business activities are completed through credit only. Credit is created by banks. Banks receive the money saved by the public in the form of deposits with them by attracting interest, security and other services, and in this way, the funds received by the banks from the public are loaned to the public, firms and institutions in the form of loans and advances.
(5) Contribution to economic development 2023:
Banks make important contribution in the economic development of the country in many ways.
(i) Banks play an important role in achieving the goal of ‘growth with stability’ by controlling the price level through credit control.
(ii) Banks contribute in increasing the rate of capital formation of the country.
(iii) Commercial banks do economic studies from time to time and publish very important information, links, reports etc. and regularly publish research papers and magazines etc. in which important economic problems are discussed and other useful material is included. is done .
(iv) Banks contribute significantly in raising capital through merchant-banking.
(v) By providing facilities of loans and advances to business, firm and institution and commerce, the essential ‘life-blood’ of business contributes significantly to business finance management.
(6) Development Banking 2023:
The participation of banks in development works is becoming very important. Many special types of banks have been established to arrange institutional finance for agriculture, industry, trade, commerce etc. Like- Import-Export Bank, National Bank of Agriculture and Rural Development, Regional Rural Bank, Industrial Reconstruction Bank, Land Development Bank, Land Development Bank, Small Industries Development Bank, Industrial Development Bank, Housing Bank etc. Banks not only help in economic development but now they are also undertaking development programs through programs like Lead Bank Scheme.
(7) Capital formation 2023:
In today’s time, the development of any country depends on the rate of capital formation of that country. Banks receive the amount of savings of the public in the form of deposits and channelize it in the form of business credit for productive purposes. At the time when banks were not in operation, the savings were kept in the form of gold, silver or other ornaments and coins were buried in the ground and this type of savings of the public remained useless, inactive and unprotected. Whose public did not get any benefit.
(8) Significance for the Government 2023:
Many types of banks also provide very important services to the government. The central bank renders its services as the banker to the government. All government dealings related to public income, expenditure and loans are done by banks only. The bank, especially the central bank of the country, plays a very important role in determining the economic policies of the government and in their implementation.
(9) Social commitment and people-oriented banking 2023:
In the present times, the importance of banks has become more important because banking policies and programs have been linked to the economic-social priorities of the country.Loans to priority areas like agriculture, industry and business, Pradhan Mantri Suraksha Bima Yojana, Pradhan Mantri Jan-Dhan Yojana, cooperation in poverty alleviation programs, accident insurance scheme etc. have made banks popular among the masses. Due to these schemes, the social commitment of the banking business has increased and has become people-oriented.
(10) Elasticity in the monetary system 2023 :
Many currency and credit related requirements keep on changing in the business. Therefore, it is necessary for a country that the currency system of that country should be flexible enough so that changes can be made in it according to the needs of the economy. Desirable elasticity can be created in the monetary system by expansion and contraction of credit by the banks as per the requirement.
The increasing importance of banks in the present times has been told in the above article. In the modern era, there has been a huge change in the traditional form of banks. In today’s time, banks are providing more services to their customers. Now a new thinking and psychology has been born regarding the role of banks. Banks are no longer urban financial institutions that cater to the interests of big industrialists and big businessmen. In the last several years, the commercial banks have undertaken a rapid expansion program of their branches and the banks have reached such remote rural areas and backward areas, where earlier they could not even be imagined. The work area of banks is continuously increasing. Due to which the importance of banks has increased.
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.