In modern times, banks also provide various services related to social welfare and economic development in the country.Banks also provide help in trade, industry, etc.,which accelerates the pace of economic development .
such functions of Banks are:-
(1) Increase in capital productivity – Bank collects surplus money from the public and grants loan for productive services which increases the productivity of capital, production and national income in the economy.
(2) Investment Promotion – In modern times, big industries need huge amount of fixed and working capital which is met by banking system and this promotes investment in the country.
(3) Encouragement to Capital Formation – Commercial banks mobilise idle savings of the people and invest the same in productive activities. Thus, they help in promoting capital formation and accelerating the rate of economic development.
(4) Increase in Employment - Banking development not only provides employment in banking sector but due to increased investment in trade and industry through bank loaning also increases employment level in the economy.
(5) Increase in Employment – Extending use of cheques, bank makes the payments easier which has removed the fear of cash loss
(6) Elasticity of Monetary system – Banks extend or contract credit as per requirement of the economy. It maintains elasticity in monetary system.
(7) Encouragement to Foreign Trade – Banks help in promoting foreign trade by arranging foreign currency for the traders and providing various assistance to foreign trade.
(8) Development of Enterpreneurs – In modern times, commercial banks are also providing assistance in development an entrepreneurship in the economy by providing loans to them.
