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Role of Commercial Bank Video Lecture | Business Economics for CA Foundation

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FAQs on Role of Commercial Bank Video Lecture - Business Economics for CA Foundation

1. What is the role of a commercial bank?
Ans. A commercial bank plays a crucial role in the economy by providing various financial services to individuals, businesses, and government entities. Its primary functions include accepting deposits, providing loans, offering financial advice, facilitating transactions, and creating credit.
2. What services are offered by commercial banks?
Ans. Commercial banks offer a wide range of services, including deposit accounts (such as savings and current accounts), loans (such as personal loans, mortgages, and business loans), credit cards, foreign exchange services, investment services, insurance products, online banking, and other financial services tailored to the needs of their customers.
3. How do commercial banks create credit?
Ans. Commercial banks create credit by utilizing the fractional reserve banking system. When a bank receives a deposit, it keeps a fraction of it as reserves and lends out the remainder to borrowers. This process allows banks to create new money in the form of loans, effectively expanding the overall money supply in the economy.
4. How do commercial banks facilitate transactions?
Ans. Commercial banks facilitate transactions by providing various payment methods such as checks, debit cards, and online banking platforms. These payment systems allow individuals and businesses to transfer funds easily and securely, ensuring efficient and convenient financial transactions.
5. What is the role of commercial banks in the economic development of a country?
Ans. Commercial banks play a significant role in the economic development of a country by mobilizing savings, channeling funds into productive investments, promoting entrepreneurship, facilitating trade and commerce, providing financial stability, and supporting the growth of various sectors such as agriculture, manufacturing, and infrastructure. Their lending and financial services contribute to overall economic growth and prosperity.
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