What Is The Importance Of Banking?

Banks play very important role in the economic life of the nation. The health of the economy is closely related to the soundness of its banking system. Although banks create no new wealth but their borrowing, lending and related activities facilitate the process of production, distribution, exchange and consumption of wealth.

In this way they become very effective partners in the process of economic development. Today, modern banks are very useful for the utilization of the resources of the country. The banks are mobilizing the savings of the people for the investment purposes. The savings are encouraged and saving rate increases. If there would be no banks then a great portion of a capital of the country would remain idle.

A bank as a matter of fact is just like a heart in the economic structure and the Capital provided by it is like blood in it. As long as blood is in circulation the organs will remain sound and healthy. If the blood is not supplied to any organ then that part would become useless. So if the finance is not provided to Agriculture sector or industrial sector, it will be destroyed. Loan facility provided by banks works as an incentive to the producer to increase the production.

Banking is now an essential part of our economic system. Modern trade and commerce would almost be impossible without the availability of suitable banking services. First of all, banking promotes savings. All manner of people, from the ordinary labourers and workers to the rich land owners and businessmen, can keep their money safely in  banks and saving centers.
Secondly, banking promotes investments. Banks easily invest the money they get in industry , agriculture and trade. They  either invest it directly or advance loans to other invensters.

Thirdly ,it is most through banks that foreign trade is carried on. Whether we export or import, it is through banks that money is transferred from one country to another. For example, bills of exchange and letters of credit are the regular ways banks use to transfer money.

Even the UN has the world bank that  is like a big deposit for all the members countries. They can borrow from it according to their needs. But unwise borrowing and wasteful spending by countries like ours leads to heavy debts and economic distress. Let us have a modern , effective but simple banking system for our progress and prosperity.

Nobody wants to credit you money if you don't have a depository account. You get superior interest rates when you have a good times past of barrowing money and paying it back. Good credit is an advantage. No credit or bad credit is a Liability. No matter which that makes life easier is ok with me.

Without bank, there would be no investment. We would all run out of money and back to bargain. By the time you earned enough to buy banquet you would not have an adequate amount to pay for a bed to sleep in.

Banking is why we are able to do all the things we do. We hate the bankers because we believe that they do nothing for us. If you are given $10,000US at the beginning of the year and compensated everyday you work. Without banking you would not have enough money to make it through one year in the average American city. Please commit to memory, you will have to run quarters and get your money from beneath the mattress when ever you find amazing you wish to buy. The time loss alone would harm most lives.