The Role of Commercial Banks in Economic Growth of India Discussion 2022

Running head: THE ROLE OF COMMERCIAL BANKS IN ECONOMIC GROWTH OF
INDIA
The role of commercial banks in economic growth of India
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Author Note

THE ROLE OF COMMERCIAL BANKS IN ECONOMIC GROWTH OF INDIA
Introduction:
The development pace in any country is accelerated by the services of the financial
institutions and commercial banks is one of the financial institutions serving the financing
needs of economy. In India, there has been the rapid expansion of the commercial banks
activities after independence. Challenges of planned economic growth has been faced by the
commercial banks and this have made them come out of the shell. The commercial banks
attention in India is being received by non-conventional sectors. The implications of the
commercial banks on financial non-conventional sector can be understood in a better way by
looking at the role of commercial banks during the era of pre-nationalization. Commercial
banks have been established according to the provision of banking regulation act, 1949 (Saini
&Sindhu, 2014).
Discussion:
After the era of independence, the commercial banks have been found to expand
rapidly. The commercial play a very significant role in the economic growth and
development in a number of ways. Commercial banks are an indispensable part of an
economy particular in India, these banks play a crucial role in promoting the trade and
exchange of technology transfer throughout the world. The commercial banks in particular
provides assistance to the businessmen by providing them with several needful things like
capital goods, technological, raw materials and many others. Thereby, the commercial banks
can be regarded as a valuable pillar of the economy.A developed financial system of the
country ensures to attain development by imparting the masses with innumerable services and
assistance in the name of trade, technology, capital goods. Commercial banks also provides
assistance to the merchant banking services to the merchants and the form operators
additionally.Commercial banks, in particular are institutions which ordinarily accepts

THE ROLE OF COMMERCIAL BANKS IN ECONOMIC GROWTH OF INDIA
deposits from the masses and advance loan. Commercial banks have a remarkable
contribution in helping and developing the foreign trade by assisting the business men of
different countries in carrying out international trading by import or export. The payments
done through various mode including checks, bank draft, credit and debit cards. Additionally,
nowadays the letter of credit has revolutionized in both domestic and foreign trade where the
importers uses the letter of credit to initialize the payment to the exporter’s bank (Kusuma&
Lakshmi, 2019). Apart from this foreign trade have also found to help in international
promotion.
Economic activity of the country is influenced by the commercial banks offering rate
of interest and making credit available. In emerging nation such as India, there are real
factors that helps in influencing the economic growth and these factors include agriculture
modernization, industrial development, foreign trade expansion, internal trade organization
and exports (Siddiqui, 2018). Some of the basic economic resources available in the country
include labor, land and entrepreneurs. Usage of such resources can be done by offering
financial assistance to the business. In this regard, active role is being played by the
commercial banks by enhancing the investment activities for the business done by the
accumulation of the savings of public.
Commercial banks has the general role of offering financial services to the business
and public so that the social and economic stability is ensured along with contributing to the
social and economic security and making the economy to grow in a sustainable manner.
Commercial banks in the Indian economy comprises of nationalized banks, state banks of
India, scheduled commercial banks, nonscheduled commercial banks and regional, regional
rural banks and foreign banks. As on June, 2018, total branches of commercial banks is
recorded at 149891 and this makes India a number one banking branch. Commercial banks
plays a crucial role in the economic development of India in the form of financing industries,