The role of banks in economic development is to remove the deficiency of capital by stimulating savings and investment.
A sound banking system mobilizes the small and scattered savings of the community, and makes them available for investment in productive enterprises.
In this connection, the banks perform two important functions: (a) They mobilize deposits by offering attractive rates of interest, thus converting savings,, which otherwise would have remained inert, into active capital.
(b) They distribute these savings through loans among enterprises which are connected with economic development.
Thus, the banks have come to play a dominant and useful role in promoting economic development by- mobilising the financial resources of the community and by making them flow into the desired channels.
The Indian banks are now playing a very active role in fostering economic development of the country.
The banking sector plays a critical role in mobilization of savings from households from across the country and placing them at the disposal of entrepreneurs.
Banking sector accounts for around three-fourth of Pakistan’s financial sector.
The online banking has accelerated financial inclusion gradually changing the financial landscape in the country.
The banking industry, however, faces tough competition unleashed in the global arena.