Bank in kerala

Banks play an important role in money management, saving all of us. Whether the bank account is for a single person or a business company, the importance of a bank is present everywhere. Banks help us to maintain our economy and secure the future. From cities to villages, there will hardly be anyone who does not have his bank account. Let us now get some information about the bank.

History of Banking in India:

According to the Banking Companies Act of 1949, banking is defined as a financial institution that accepts deposits from the public by way of credit or investment, repayments on demand, check drafts, orders, etc. payable by others.

Pre-Independence Stage:

• More than 600 banks were present at this time.
• The first bank of India was established in 1770 and thus marked the beginning of the banking system in India with the foundation of the Bank of Hindustan.
• The top three banks were merged during this phase - Bank of Bengal, Bank of Bombay, and Bank of Madras and came into existence as Imperial Bank, which was later taken over by SBI in 1955.

Importance of Banks:

The banking system plays an important role in the economy of any nation. Banks as the most important part of the money market are important tools of the country's economic development. Their role is most important in capital formation, economic management of trade, industry, and agriculture, and in the implementation of economic, social policies and programs of the country.

As the central component of the money and credit system, there is no part of the economy which is not affected by the banks. The increasing participation of the bank in development programs has given birth to a new mode called 'Developmental Banking'.

The importance of banks can be summarized as follows:

(1) Creation of Credit:

Credit is an important pillar of the modern economy. Most of the business activities are done through credit. Banks create credit. They get the savings of the public in the form of deposits by attracting interest, security, and other services and lend the funds thus obtained in the form of loans and advances.

(2) Capital Formation:

The development of any country depends on the rate of capital formation. Banks receive the savings of the public in the form of deposits and channel them into productive activities in the form of commercial credit. When banks were not in vogue, savings were kept in the form of gold and silver or ornaments or coins buried in the ground and public savings lay idle, unsecured, and unutilized.

(3) Control of Credit:

For business needs, it is very important to have a balance between the demand for credit and the amount of credit available or the supply of credit, otherwise, changes in the value of money (inflation, inflation, etc.) have serious effects on the economy of the country. The commercial banks create credit and the central bank of the country controls the credit.

(4) Operation of Monetary System:

The central bank of the country issues paper currency and also operates the currency system as per the instructions of the central government.

(5) Elasticity of Money System:

Business changes in many currencies and credit-related requirements. Therefore, the monetary system of the country must be flexible enough so that changes are made in it according to the needs of the economy. Desirable elasticity can be created in the monetary system by expanding and contracting the bank credit as per the requirement.

(6) Role in Economic Development:

Banks play an important role in the economic development of the country in many ways.

like:

(i) Banks contribute to increasing the pace of capital formation.

(ii) By controlling the price level through credit control, the goal of 'Growth with Stability' can be achieved.

(iii) By providing facilities of loans and advances to trade and commerce, the 'life-blood' necessary for business contributes significantly to business finance management.

(iv) Banks contribute to raising capital through merchant banking.

(v) Commercial banks publish important information, papers, reports, etc. from time to time by conducting economic studies and regularly publish research papers, journals, etc., in which important economic problems are discussed and others. Useful material is included.

(7) Development Banking:

The participation of banks in development works is becoming very important. Many specialized banks have been established to provide institutional finance for agriculture, industry, trade, commerce, etc. such as Industrial Development Bank (IDBI), Import-Export Bank (EXIM), Agriculture and Rural Development. National Bank of (NABARD), Land Development Bank (LDB), Regional Rural Bank (RRB), Industrial Reconstruction Bank (IRCI), Small Industries Development Bank, Housing Bank, etc.

Banks not only help in economic development, but now they are also leading development programs through programs like Lead Bank Scheme.

(8) Social Responsibility and Public Orientation:

In the modern era, the importance of banks has also increased because banking policies and programs have been linked to the economic-social priorities of the country.

Loans to priority sectors (agriculture, industries, etc.), cooperation in poverty alleviation programs, Pradhan Mantri Jan-Dhan Yojana, Pradhan Mantri Suraksha Bima Yojana, accident insurance scheme, etc. have made banks popular among the masses. Due to these schemes, the social commitment of the banking business has become more people-oriented.

(9) Catalytic Agent of Socio-Economic Growth:

Modern banks perform many other important functions in addition to traditional banking services. The participation of banks in the programs of economic development and socio-economic progress of the country is increasing. Development-Banking is a new dimension of the banking business.

After the nationalization of major commercial banks in India, the participation of commercial banks in programs like poverty alleviation, self-employment schemes, backward class upliftment programs, development of small and cottage industries and handicrafts, rural development, industrial development, import-export business, etc. became very important. Is.

Now commercial banks are no longer commercial institutions lending money by accepting deposits. They have now become important catalysts of socio-economic progress.

(10) Different Types of Services to Customers:

Banks are also important because they provide many useful services to their customers, some of the important ones are as follows:

(i) Collection of Cheques, Bills, etc. for the customers.

(ii) Payment of checks drawn by customers and payment of their bills due.

(iii) Remittance facilities from one place to another.

(iv) Buying and selling of shares and debentures and other securities.

(v) Underwriting of securities.

(vi) To act as Trustees, Executors, etc. (Trustees, Executors, etc.).

(vii) To make payments as per the Standing Orders of the customers.

(viii) Advising clients regarding capital investment etc.

(ix) To keep the valuables of the customers safe in the lockers.

(x) To give references about the financial condition etc. of the customers.

(xi) To provide facilities of Travelers Checks and Letters of Credit.

(xii) Providing consumer credit.

(xiii) To make arrangements for foreign exchange.

(11) Importance to Government:

Banks also provide very important services to the government. The main bank acts as the banker to the administration. All government transactions related to public income, expenditure, and debt are done through banks. The bank, especially the central bank of the country, plays the most important role in the determination and implementation of the economic policies of the government.

Conclusion:

The above discussion throws light on the increasing importance of banks. There has been a drastic change in the traditional nature of banks. Gone are the days when banks were merely deposit-taking and lending institutions, operating in the big cities and business centers, driven by the spirit of maximum profit with minimum risk.

In our country, especially after the establishment of the State Bank and the nationalization of 14 major commercial banks in 1969, not only the Geographical and Functional horizons of banks have expanded, but there have been revolutionary conceptual changes about them.  Banks have now become a catalyst of the economic development of the country as well as an important medium of social change.

New thinking and psychology have been born regarding the role of banks. Banks are no longer urban financial institutions catering to big industrialists and big businessmen. In the last years, commercial banks have carried out branch expansion programs at a rapid pace and the banks have reached such remote rural areas and backward areas, where earlier they could not even imagine their existence.

Today, the interests of banks are not only big industrialists or businessmen. Banks have also opened their doors for small traders, unemployed youth, small industrial business units, weavers, artisans, physically handicapped persons, small farmers, etc.

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