Role of Commercial Bank in Economic Development in India

INTRODUCTION:- Every country needs the services of financial institutions for accelerating the pace of development. Commercial banks have played a critical role in the economic development of a country. Now a day’s commercial banks are important not just from the point of view of economic growth, but also financial stability. In emerging economies, commercial banks are special for three important reasons. First, they take a leading role in developing other financial intermediaries and markets. Second, due to the absence of well-developed equity and bond markets, the corporate sector depends heavily on banks to meet its financing needs. Finally, in emerging markets such as India, commercial banks cater to the needs of a vast number of savers from the household sector, which prefer assured income and liquidity and safety of funds, because of their inadequate capacity to manage financial risks.

Forms of banking have changed over the years and evolved with the needs of the economy. The transformation of the banking system has been brought about by deregulation, technological innovation and globalization. While banks have been expanding into areas which were traditionally out of bounds for them, non-bank intermediaries have begun to perform many of the functions of commercial banks. Thus compete not only among themselves, but also with non-bank financial intermediaries, and over the years, this competition has only grown in intensity. Globally, this has forced the commercial banks to introduce innovative products, seek newer sources of income and diversify into non-traditional activities.

The commercial bank primarily lending and borrowing of money, accepted deposit from the public and payable on demand and withdrawn able by cheque, draft etc. They provide and maintained different type of account like current account, saving account, and fixed deposit and also provide different type of loan, cash credit etc. They help