Description

The banking sector plays an important role in the development of any nation. Banks encourage the willingness to save among people by offering them attractive savings and deposit schemes. They facilitate the flow of funds from the areas of surplus to the areas of deficit. For efficient usage of people's funds, banks invest those in socially desirable high-yielding projects that ultimately contribute to meeting the dual objective of social as well as economic growth of a country. Thus, banks mobilize the savings of the community into productive channels. As a result of the efficient deployment of the funds, into productive channels, the rate of capital formation rises and ultimately there is an increase in national income. That is the reason why an efficient banking system is regarded as the precondition for the growth of any economy. According to section 5(b) of the Banking Regulation Act, of 1949, banking is defined as, ―Accepting, for the purpose of lending and investment, deposits of money from the public, repayable on demand or otherwise, and withdrawable by cheque, draft, order or otherwise.‖