Economic development is a permanent process. Bank develop the capital of the country in audit to achieve the full employment level and improve the economic life of the people. To exploit the resources capital and technology are a must for that. Bank also play vital role in providing capital to the economy. Therefore Bank is the only institution which provides capital and solves the problems.
Role of Bank in the Economic Development
The bank mobilizes idle savings of the people. It pools them for investment in different sector and regions. It helps in the creation of capital. If the supply of money equals the demand for it, the country does not depend upon the foreign sources. The bank gives credits to the entire sector. It provides capital to agricultural. The farmer buys input (seeds, fertilizers). He uses the bank credit to reclaim the land. He purchases machinery to increase land produce.
The bank promotes internal and external trade. It opens the letter of credit for external trade. It discounts the promissory note and bill of exchange. Bank makes the payment easy in all types of trade.
The bank promotes investment function in all economic activity. It under writes the share of new joint stock company. It also makes investment in the share, security, bond, and debenture. Banks also plays an important role in the expanding the supply of money by creating credit, according to the needs of the country. The expansion and contraction of credit help the economy to enough for economic development. It also remits money and capital from one place to another place through draft and T.T.O’s. So bank has a vital role play in the economic development of any country. In the develop country it improves and promotes economics welfare. While under develop country bank develops the formation for economic prosperity.