Banks play an important role in developing the economy of India by taking the following steps:
- Banks keep money of the people in safe custody to be used by the depositors in future.
- Banks also increase the savings of the depositors by paying interest on the money deposited.
- Banks mediate between people who have surplus and those who need money. This is done through granting loans. People avail themselves of these loan facilities to increase production and income.
- Banks, being the formal source of credit, give loans at a very low rate of interest at flexible terms and conditions.
- Special provisions are made through banks for the upliftment of agriculture and industry like waiving of loans of the farmers.
