How do banks play an important role in the economy of india 0?
Answers
Banks are the main suppliers of money which play an important role in the financial system and the economy. As a key component of the financial system, banks allocate funds from savers to borrowers in an efficient manner.These financial services help to make the overall economy more efficient.
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
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