Saturday, January 10, 2009

Importance of Banking

Bank plays a significant role in the economic development of the country. The whole economy of a country is absolutely dependent on the efficient and well-organized banking system. Industrial, agriculture and commercial progress of a country is not possible without a good banking system.

The importance may be defined as follows:

* Banks deal in foreign exchange by purchasing and selling foreign currencies and by issuing letters of credit.

* Banks play the prime role in accumulating capital by collecting the scattered savings of the people.

* Banks utilize their collected funds by advancing loans to commercial and industrial undertakings.

* Banks perform various agency services on behalf of their customers. They collect or make payment of bills of exchange, dividend, insurance premium etc.

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