Importance of Bank

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Date Submitted: 05/13/2012 10:14 PM

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Importance of Bank

Bankers play a very important role in the economic life of the nation. The health of the economy is closely related to the soundness of its banking system. Although banks create no new wealth but their borrowing, lending and related activities facilitate the process of production, distribution, exchange and consumption of wealth. In this way they become very effective partners in the process of economic development. Today, modern banks are very useful for the utilization of the resources of the country. The banks are mobilizing the savings of the people for the investment purposes. If there would be no banks then a great portion of a capital of the country would remain idle. 

A bank as a matter of fact is just like a heart in the economic structure and the Capital provided by it is like blood in it. As long as blood is in circulation the organs will remain sound and healthy. If the blood is not supplied to any organ then that part would become useless, so if the finance is not provided to Agricultural sector or industrial sector, it will be destroyed. Loan facility provided by banks works as an incentive to the producer to increase the production. Many difficulties in the international payments have been overcome and volume of transactions has been increased. Cheques, drafts bills of exchange and letters of credit are very important instruments of the banks. The banks collect these instruments drawn on banks in other cities or countries and proceeds according to the accounts of the customer's concerns.

The banking system in Malaysia comprises the Central Bank (Bank Negara), commercial banks and other financial institutions. The financial institution can be divided into two categories, it is the monetary institutions (Bank Negara and commercial bank) and the non-monetary institutions. (financial companies, merchant banks, discount houses and Credit Guarantee Corporation)

The Central Bank, Bank Negara Malaysia is the central bank for...