Bank plays an important role in the economic development of the country

Money & Credit (C10)

"Bank plays an important role in the economic development of the country." Support the statement with examples.

Answer

Role of Banks in the economic development of the country:

  1. There is a huge demand for loans for various economic activities.
  2. Banks make use of the deposits to meet the loan requirements of the people.
  3. Banks mediate between those who have surplus funds and those who are in need of these funds.
  4. They charge a higher interest rate on loans than what they offer on deposits.
  5. They charge from borrowers and what is paid to depositors is their main source of income.
  6. Banks promote all the sectors of the economy through loans.