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What Is The Role Of Financial Institutions In Economic Development?

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James Milford Profile
James Milford answered
Financial institutions play an extremely important role in economic development. Financial institutions cater to important needs of society such as taking care of small savings at reasonable rates. Everyday working men and women have the option of putting their savings into a number of alternatives such as Government small saving schemes, deposits into a saving account provided by their bank, recurring, deposits, time deposits and also the alternative option of investing in mutual funds or stocks.
Financial institutions also undertake modern functions that could not have been done 20 years or so ago. The relatively new invention of Internet banking allows customers to access their saving and current accounts, manage their money and even make payments without ever having to set foot in the bank’s building. This and ATM’s have completely revolutionised the way that people can access their money. Online payments can also be made which saves the customer’s time and energy. In the modern day economy when people with hectic lifestyles don’t have the time to stand in payment queues all day, financial institutions can only be commended for providing this convenient way of payment.
Financial institutions must also offer an extremely efficient service by developing themselves to make the best use of the credit in their systems. A decent financial institution must make sure that they cater to the all the needs of investors by making high amounts of capital for the big and expensive projects that are being undertaken by the industrial and service sectors. Although it is not just the big people that the financial institutions need to be backing. The small companies and independent businesses must also have credit backing them if they are to expand and grow for the good of the country’s economy. This makes the subject of credit availability by financial institutions an extremely important issue.
Mehreen Misbah Profile
Mehreen Misbah answered
Financial institutions, which are immensely important to the smooth functioning of a society have certain functions of their own, which accentuates their role in the society, consolidating their significance to an extensive extent.

The first function of financial institutions is the transformation of assets, which are acquired through markets, into a wider and more preferable form, which becomes their liability – this function is performed mainly by financial intermediaries, which is undeniably the most important category of financial institutions.

Also financial institutions are involved in exchanging of assets on behalf of their customers. Other than that, exchanging of assets for their own personal accounts is also part of their job. Furthermore, financial institutions create financial assets for their customers and sell those assets to other market participants for a definite emolument. In addition to all these functions, financial institutions are also involved in providing investment advice to market participants and managing the portfolios of market participants.
Anonymous Profile
Anonymous answered
The role of the financial institution in the development is really important
because every business needs the money and its the   sole provider of the money in the society
so its impact is really important
Anonymous Profile
Anonymous answered
Currency chests: Currency chest are receptacles (boxes or containers) in which stocks of new or re- issuable notes are stored along with rupee coins. The money kept in the currency chests is the property of the Reserve Bank. Moreover, the currency held in the currency chest is not deemed to be in circulation.

The State Bank of India had the privilege of maintaining currency chests on behalf of the Reserve Bank for about more than 40 years. Section 45 of the Reserve bank, if directed by the Central Government, with reference to any place, appoint any person other then the estate bank of India, as its agent. The total number of currency chests in the country at the end of the June 1994 was 4,068. Of these 17 currency chests were maintained with the Reserve Bank, 2,861 with State Bank of India group, 740 with nationalized banks and 437 with Government treasuries and 5 with the Jammu & Kashmir Bank Ltd. In addition 499 repositories were maintained with the branches of Public Sector Banks.

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