Role of Commercial Bank in the Economic Development of nation

Commercial banks play important role in the economic development for all country and following are some of the major activites of commercial banks towards strengthening economic backbone of the nation:

1. Developing industry & business
Banking sector provides financial resources to the entrepreneurs for the establishment of industries and business sector. This creates a good environment for industrial development and it also creates employment opportunity for a large number of unemployed people. Consequently goods and services can be exported and foreign currency can be earned.

2. Mobilising savings
Individuals with small income can only save small amount of money in the commercial banks, which alone is insufficient to invest in large scale projects. So, bank collects saving from thousands of people from different part of the country and by mobilising savings, huge capital is collected which can be invested in large scale economic activities.

3. Relief from inappropriate exploitation
Commercial banks provide loan on low rate of interest to the people for them to carry out different business or for personal purpose too. Because of this, people donot have to suffer from high rate of interest of unorganized sources of credit and can easily manage the earning sources.

4. Protecting valuable resources
Commercial banks provide facilities for the protection of valuable metals and documents. Generally, people try to protect ornaments, gold and other sensitive document because there may be chance of loss at home. Banks provide this facility through the locker system by taking some commision or charges.

5. Helpful for foreign exchange
Foreign currencies are the backbone for promoting international trade. The central bank make policies for an appropriate exchange rate and commercial banks carry out different functions regarding exchange facilities, protection of foreign currencies and help to manage the import and export under the guidence of central banks.

6. Helpful for government
Government receives revenues and taxes from various sources and from different parts of the country and commercial banks act as the bridge between these sources and government. In the same manner government allocates budget for different development activities and these too are distributed through commercial banks.