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.

What is Commerce?

Commerce means the exchange of items of values or the process of distribution of goods and services. Commerce is the removal of goods and services from a place where they are produce and sent to the place where they are scarce and hence in demand. We may also define it as:

"The term commerce is applied to all these activities or functions which are intended to bring about an exchange of goods and services against money or money’s worth."

Commerce is divided into two basic parts:
1. Trade
2. Auxiliaries of trade

Trade:
Selling and buying of goods is trade. A mediation of the exchange of goods between the producer and the consumer is called trade. Trade is of two kinds:
a. Import
b. Export

Buying goods from out side the country is called import and selling of goods to other countries is called export. If imports of one country are higher than exports, it means the economy of the country falls down. The economy of every country is highly depends on its import/ export.

Auxiliaries of trade:
It means aids to trade. It includes the following services; banking, insurance, warehousing and agents.