Write a critical essay on how Banks and other nonstate organizations helps our country. What benefits do we get from them?
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Answer:
Banks have immense monetary assets and subsequently are dominant players in all sectors of financial markets like credit, cash, securities, foreign exchange and derivatives. Commercial banks have a critical part in the general financial position of the economy as they give assets to various purposes and additionally for various durations. A rate of premium is charged by banks for the loan.
Commercial banks give loans to organizations in either cash credits, overdrafts, term loans, purchase/discounting of bills, or issue of letter of credit. Banks help enterprises by providing loans to produce goods and contribute towards industrial growth and generate employment opportunities.
Technically, loans given by banks cannot be a permanent source of funds for the organizations as it has an interest rate and loan must be repaid within a specific period allotted. Before a loan is sanctioned by a bank, the borrowing party must provide some security. Banks also provide other services like merchant banking, corporate advisory services, portfolio management services etc.