Role of Banking in Indian Economy
Role of Banks in Indian or any economy!
Banks help in circulating the flow of money,
With instruments like CRR(Cash Reserve Ratio), CAR ( Cash Adequacy Ratio) Banks regulate the flow of credit. If credit is cheaply available (CRR and CAR ratio are low ), it means more money is available in economy easily
Banks play a role in Capital Formation
There is a difference between hoarding and saving. If incentives are provided for saving money into bank and not hoarding, it can create more capital that can be utilized for various fruitful purpose.
Financing any sector/Industry
Banks provide credit to business for short, medium and long term to industries of various size and thus driving growth in particular sector.
Employment Generating Activities
By providing financing and Capital Formation , it is also driving employment opportunities in the economy too!
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