What is Bank ? How it work for economy ? Let’s read in detail
A bank is basically a financial institution that accepts deposits from the public and creates a demand deposit while simultaneously making loans. Bank is an organized group of people brought together with a specific purpose. Banca Monte De Paschi Di Siena is the first ever bank of the world founded on 1472 in the Tuscan City of Siena. Bank lends money by making advances to customers on current accounts, by making installment loans, and by investing in marketable debt securities and other forms of money lending. Banks provide different payment services, and a bank account is considered indispensable by most businesses and individuals. There are different types of banks being established by centering the customer’s services. The first ever founded bank of Nepal is Nepal Bank Limited which was established on the date of November 15, 1937(Kartik 30, 1994). Almost every bank follows the rules and regulations implemented by the Nepal Bank Limited. Since the establishment of Nepal Bank Limited, the developments of banking sectors have made the huge progression. Commercial banks, Investment Banks, Development Banks are some of the solo examples regarding the bank’s types.
Banking works are carried out by the two of the functions; the first one is Primary while the other one is Secondary function. The primary function of the bank includes accepting deposits, granting loans, advances, cash, credit, and overdraft and discounting of bills. While the secondary function includes issuing letter of credit, undertaking safe custody of valuables, providing consumer finance, educations loans and the other types of loans. The bank provides adequate amount of loan facilities for the customers who desire to do the earning on their own country. The establishment and the rapid growth of the banking sectors have had a massive impact over the nation. The development works are being carried out easily as the banks are investing a lot in those areas.
The banking sectors play an important role in the modern economic world. Manufacturers borrow from banks the money needed for the purchase of raw materials, resources and to meet other requirements such as working capital. It is safe to keep the money in the banks as they provide the interest too. The saving we have made in the banks can be utilized to produce new capital assets. The bank plays the vital role in economic development as it is financing in agricultural sector, rural sector, industrial sector and business sector. The banks have been providing the employment facilities also for the qualified individuals. The banks have provided the huge hands in the capital formation too. The ongoing growth of banking sectors could change the overall face of the nation, especially in developing countries like Nepal.