Role of Bank in the Economic Development

January 19, 2021

 Role of Bank in the Economic Development

Economics development is a permanent process to develop the capital of the country in audit to achieve the full employment level and improve the economic life of the people. To exploit the resources capital and technology are a must for that. Bank play vital role in providing capital to the economy. Bank is the only institution which provides capital and solves the problems.

The bank mobilizes idle savings of the people. It pools them for investment in different sector and regions. It helps in the creation of capital. If the supply of money equals the demand for it, the country does not depend upon the foreign sources. The bank gives credits to the entire sector. It provides capital to agricultural. The farmer buys input (seeds, fertilizers). He uses the bank credit to reclaim the land. He purchases machinery to increase land produce.

The bank promotes internal and external trade. It opens the letter of credit for external trade. It discounts the promissory note and bill of exchange. It makes the payment easy in all types of trade.

The bank promotes investment function in all economic activity. It under writes the share of new joint stock company. It also makes investment in the share, security, bond, and debenture. Banks plays an important role in the expanding the supply of money by creating credit, according to the needs of the country. The expansion and contraction of credit help the economy to enough for economic development. It also remits money and capital from one place to another place through draft and T.T.O’s. thus bank has a vital role play in the economic development of any country. In the develop country it improves and promotes economics welfare when under develop country it develops the formation for economic prosperity.

 

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