Who does banks pay an important …

Banks play an important role in developing the economy of India. Following points show the importance of banks in the Indian economy:

1. Banks help people to save their money in safe custody. To save their money, people deposit their money with banks.
2. They only keep about 15% of the deposits as cash. The rest is used to give loans to various people.
3. Loans are required for various economic activities as well as investments, Banks mediate between people having surplus cash and those in need of it.
4. 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.
5. Credit provided by banks is crucial for the country’s growth and economy.
6. Banks encourage depositing money by giving an interest This contributes to savings in the economy.
7. By providing credit at reasonable interest rates, they encourage investment and prevent exploitation from the informal sector.
8. Banks employ a large number of people and as such, they solve employment to some extent.