Incorrect Statement about Banks

There are several functions of banks aimed at promoting the economic growth and development of a country. However, one of the following statements about banks is incorrect, and that statement is:

D) None of the above.

Explanation

The statement "none of the above" is incorrect because options A, B, and C are all correct statements about banks. Below is a detailed explanation of each statement:

A) Banks encourage saving habits among people.

Banks offer various types of deposit accounts, such as savings accounts, fixed deposit accounts, and recurring deposit accounts, to encourage people to save their money. These accounts provide interest rates that are higher than those offered by traditional savings methods, such as keeping cash at home or in a piggy bank. Hence, banks play a significant role in promoting saving habits among people.

B) Banks mobilise savings and make them available for production.

Banks collect deposits from customers and use these funds to finance various investment opportunities. Banks offer loans to individuals and businesses for various purposes, such as buying a house, starting a business, or expanding an existing business. Thus, banks mobilise savings and make them available for production, which helps to boost economic growth.

C) Banks help in creating credit money.

Banks can create credit money by lending out more money than they hold in deposits. This process is known as fractional reserve banking. Banks hold only a fraction of the deposits they receive, and they lend out the rest to borrowers. The money lent out by banks becomes new deposits in other banks, and the process continues. Hence, banks play a crucial role in creating credit money and facilitating economic transactions.

Conclusion

In conclusion, the correct answer to the question is option D, "None of the above," is incorrect. All the statements about banks, including encouraging saving habits, mobilising savings, and creating credit money, are correct.

Answer is (d)