(eee ; LU.) IH SY LL bodies or tr = COMMERCIAL BANKS IN ad MIC DEVELOPMENT ECONO vd ‘The Banking Sector has for cen ee Of the il of economic prosperity: Indeed history bi mance for i Some star information regarding how banks provide inance for imperialist Vent in newly acquired colonies. Over ee banks have formed an IMportay, part in providing an avenue for both savings and investment. Land, labour, capital and entrepreneurs are the basic economig resources available to business. However, to make the use of thes resources, a business requires finance to purchase land, hire labour, py for capital goods and pay for individuals with specialized skills. In ; country like Pakistan, the people suffer from lack of savings to set y business. This gap has to be filled by the massive resources of the banking sectors, Detail role of commercial banks in economic development i given below: . 4 \ ‘ Cal 1. Trade Development: presivehe Capitah aa te Peat: Vee sistemas + ethet [eG a0 The commercial banks provide capital, technical \esigtance and other facilities to businessmen ir need, which leads t0 development in trade. 2. Agriculture Development: Fruaue A4 S Commercial banks finance the most im f the 7 yee . portant sector of UF Saas economies i.e. agriculture. Shorf, medium and Tong-term loa" provided for the purchase of seeds & fertilizer, installation of tub? ells, construction of warehouses, purchase of tractor and er etc. = a mee = beicnie 3 Scanned with CamScannerBANKING AND FINANCE _ da oN Finaw [role 7 nduste F Zector Be one gountries, which concentrated on industrial sector made rapid development, South Korea, Malaysia, Taiwan, Hong Kong and anomie ve recently developed their industrial sector with the help of : Auchow jroial banks puwber spre ital Formation: fycyeoo® | Capital Forn fy net Commercial banks help in increasing the rate of capital formation country. Capital formation means increase in number of production peercnnology, plant and Tachinery. They finance the projects ais ple for increasing the rate of capital formation . ads wid pevelopment of Foreign Trade: facil fe “6%, Courri, Commercial banks help the traders of two different countries to business. Letter of credit is issued by the importer’s bank to the to ensure the payment. The banks also arrange foreign exchange {Transfer of Money: Facilitate transfering 8) dand, Commercial banks provide the facil lity of transferring funds from one ize to another, which leads to the growth of tradi 4, More Production: | "1 Econom), now Development A good banking system ensures mord production in all sectors of . It increases the production capabilities of the economy by ital structure and division of labour. of Transport: Finance AH * Schone banks financed the transport sector through Prime Scheme, It has reduced unemployment on one hand transport facility on the other hand, Remote areas are through developed transport system. beablur _ Hepp whet in Bak cerns and individials can make themselves n i oney in banks, The banks also ep their precious articles and te faurenss le to saye more,. Different are introduced for this ban and rural areas, scanned with Camscanner_ MMERC| Vl. Const Su Commercial Banks provide credit { facilities to their cy, the purchase or construction of houses. nto eu 12. Assistance to Govt: By providing funds, to government for development pr, dhe commercial banks share the goverment for economic stability, 13. Increase in Employment: Whew ‘faciitet, Indus rly ae S708 ‘A country’s economic prosperity depends on the develont > ., ent og trade, commerce, industry, agriculture, transport and communicati These sectors are financed by the commercial banks and exp tt, opportunities are increasing. i, 14. Saving in Metallic Reserve: Cheques and drafts etc. work like money. In this his way the nea precious metals to make coins reduces and metallic reserve of the coma can be utilized on other important matters. s 15. Credit Creation: fawkes 7 Factenes Caedk eet Commercial banks are called the factories of credit. They advax much more than what they collect from people in the form of deposi Through the process of credit creation, commercial banks provide finan all sectors of the economy thus making them more ee as be 16. Proper use of Money: Soattered sieeniead os fp a] People deposit their savi wis int in S80 ee ae ae “becomes a huge amount in this way, which can be | can be used for diffe "projects in a ay. ; 17. Financial Advices: pel a Ft Aduisey Commercial also give financial advices to P : malin we 1 rh thes Utes werk keBANKING AND FINANCE 141 align a> Udy PAU 4 gt sess of Monetary Policy: > Under SSP 1 SDE ban suds Buc — Cen Ir, 30. inder the supervision of central bank. dil scheduled commercial banks**'“ fort for the success and objectives of monetary policy. This joined 7 an of commercial banks makes the economic devélopment possible. Met) i Use of Modern Technology: ' chnology in less developed countries is only veloped commercial banking as it can be the These funds are utilized for the import of The use of modern te i f de" ple in the presence 0! aes source of their funds. mai technology from developed countries. mod n Export Promotion Cells: In order to boost the exports of the country, the banks have established export promotion cells for the information and guidance to the exporters. B. Economic Prosperity: Economic prosperity of a country depends on number of factors ipeluding the development of commercial banking. A sound banking system promotes. the economic status of the people by providing them short, mnedium and long-term loans. ; . 7 curgdeyerr te maderize 4, Training Center: af Se hu % ——— : the Soew a Commercial banks established many trading centers {gr their employees to modernize the banking system of a country. In this way the banking experts enhance their abilities and contribute towards the development of country. NEEDFOR; = Mot Fee xerei Aereet Cakouner Hea ee r aus of the liabili ies of a banker are demand obligations. In order the demand liabilities on deposits, he musi_keep with him Sufficient amount of cash is i i if, reserve. This is considered as first line of ea If the bank does not keép an adequate amount of cash | Se : any time banker is not able to demand obligations 94 UL! =e Bie bad aken w may le ie to bank-ruptcy. On th: mis and es more cath reserve i kept than the fenuene hn the Ps bank wi 0 need fc h reserve by the commercial ae Aare: 3 scannea'with amocanner