The importance of commercial bank is as follows:
1. Capital formation: Capital and its supply is one of the most important factors in economic development. It is well known that banks by acting as financial intermediaries between the savers and the borrowers play a very important role in its formation. People having surplus cash or savings generally do no know how to invest it. Here the banks step in and collect the surplus from them which in turn encourage them to save more.
2. Providing loan: Commercial bank provide short term loan to the businessman. It also provides mid term and long term loan in safe and profitable sector. This loan plays an important role in the economic development of the country.
3. Investment: In any country for the economic development investment is an important thing. Commercial bank invests money in the profitable sector or business which develops the new business.
4. Creating medium of exchange: Commercial bank does not issue notes but as the medium of exchange it also issue cheque, draft, bill of exchange etc. For this reason the economic transaction are increasing & development also increases.
5. Expansion of home trade: By performing activities like- giving loans, safety & security of money, preserve the money, sale of shares & debentures etc. Commercial bank plays an important role in the expansion of internal business of the country.
6. Helping international trade: By giving services like-letter of credit, determine the exchange rate, repays the amount etc, commercial bank establishes relation between importer and exporter that enhance the international trade.
7. Maintaining economic stability: To maintain the economic stability commercial bank follows the credit control method of central bank.
8. Role as agent: It performs different activities like- collecting the money of cheque or draft, repay the insurance premium, purchase & sale of shares & debenture etc. In favor of clients. By helping the clients it plays an important role in the development of the country.
9. Role as adviser: Commercial bank supplies different information & gives advice to the client regarding various aspects about rules & regulations.
10.Assistance in transfer of money: commercial bank transfers money from one place to another. It reduces the risk of carrying money & makes the transaction easy and comfortable that expands the business.
11. Employment: By giving financial help commercial bank establishes many business & industry which increase the employment opportunities for the unemployed people.
12. Development of standard of living: commercial banks provide various facilities to businessmen, general people that help to develop the living standard of the people.
13. Implementation of government financial policy: Though central bank formulates the monetary & fiscal policy of the government but it actually implements through commercial bank that help to maintain a sound economy.
14. Establishment of social security: By keeping money as a custodian it maintain a social security for the general people as well as the businessmen.
At last we can say that for the economic development of the country commercial bank plays a vital role and it is the middle centre of the money market.
1. Capital formation: Capital and its supply is one of the most important factors in economic development. It is well known that banks by acting as financial intermediaries between the savers and the borrowers play a very important role in its formation. People having surplus cash or savings generally do no know how to invest it. Here the banks step in and collect the surplus from them which in turn encourage them to save more.
2. Providing loan: Commercial bank provide short term loan to the businessman. It also provides mid term and long term loan in safe and profitable sector. This loan plays an important role in the economic development of the country.
3. Investment: In any country for the economic development investment is an important thing. Commercial bank invests money in the profitable sector or business which develops the new business.
4. Creating medium of exchange: Commercial bank does not issue notes but as the medium of exchange it also issue cheque, draft, bill of exchange etc. For this reason the economic transaction are increasing & development also increases.
5. Expansion of home trade: By performing activities like- giving loans, safety & security of money, preserve the money, sale of shares & debentures etc. Commercial bank plays an important role in the expansion of internal business of the country.
6. Helping international trade: By giving services like-letter of credit, determine the exchange rate, repays the amount etc, commercial bank establishes relation between importer and exporter that enhance the international trade.
7. Maintaining economic stability: To maintain the economic stability commercial bank follows the credit control method of central bank.
8. Role as agent: It performs different activities like- collecting the money of cheque or draft, repay the insurance premium, purchase & sale of shares & debenture etc. In favor of clients. By helping the clients it plays an important role in the development of the country.
9. Role as adviser: Commercial bank supplies different information & gives advice to the client regarding various aspects about rules & regulations.
10.Assistance in transfer of money: commercial bank transfers money from one place to another. It reduces the risk of carrying money & makes the transaction easy and comfortable that expands the business.
11. Employment: By giving financial help commercial bank establishes many business & industry which increase the employment opportunities for the unemployed people.
12. Development of standard of living: commercial banks provide various facilities to businessmen, general people that help to develop the living standard of the people.
13. Implementation of government financial policy: Though central bank formulates the monetary & fiscal policy of the government but it actually implements through commercial bank that help to maintain a sound economy.
14. Establishment of social security: By keeping money as a custodian it maintain a social security for the general people as well as the businessmen.
At last we can say that for the economic development of the country commercial bank plays a vital role and it is the middle centre of the money market.