The role of banking system in the
economy can be explained under the following headings.
1)
Mobilisation of savings
The banks encourage thriftiness and
save more among people. The men can be free of the future anxity when do not
have income on account of savings.
2)
Capital Formation
The capital formation is crucial for
the economic development of a country. The less developed countries likes Nepal
are suffering from low capital formation. The bank collects idle money from
people.
3)
Promotion of Employment
The unemployment is a serious problem, which may result into
severe social political and economic consequences. In Nepal, pressure of
population on land is high. A large share of labour force is unemployed and
under employed. The bank helps to relieve the economy from the pressure of
unemployent. The banks provides loans to business, entrepreneurs and farmer in
different forms.
4)
Upliftment of poor
The banks make available loans to
rural people on reasonable rate of interest. This helps farmers to understand
agricultural and non agricultural works.
The small farmer development project, small sectors development programme, small
and cottage industries project, micro credit project have been implement by
agricultural development bank and commercial bank in Nepal for the upliftment
of the poor.
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