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How do banks play an importanr role in Indian economy?

Posted by Poornima Singh 6 years, 10 months ago

CBSE > Class 10 > Social Science

1 answers

Yogita Ingle 6 years, 10 months ago

Banks play an important role in the economy:
1. They only keep about 15% of the deposits as cash. The rest is used to give loans to various people.
2. Loans are required for various economic activities as well as investments, Banks mediate between people having surplus cash and those in need of it.
3. They give interest to the depositors and they charge interest on those taking loans from the banks. The difference between the interest rates is the main income of the bank.
4. Banks encourage depositing money by giving an interest This contributes to savings in the economy.
5. By providing credit at reasonable interest rates, they encourage investment and prevent exploitation from the informal sector.

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CBSE > Class 10 > Social Science