What is the role of a commercial bank in the economy?
Show answer & explanation
Correct answer: D
Explanation
The correct answer is option 4 i.e. To provide financial services, such as accepting deposits, lending money, and facilitating payments.
Commercial banks play a pivotal role in the economy by offering a range of financial services that facilitate economic activities. Their primary functions include:
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Accepting Deposits: Banks provide a safe place for individuals and businesses to deposit their money, offering various types of accounts such as savings, current, and fixed deposits.
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Providing Loans and Advances: By lending money to individuals, businesses, and governments, banks stimulate economic growth and development.
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Facilitating Payments: Banks offer payment services like electronic fund transfers, cheque clearing, and online banking, enabling smooth financial transactions.
Other options :
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To print and issue currency: This is the responsibility of the central bank, not commercial banks.
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To set interest rates for the entire banking system: Interest rates are influenced by the central bank's monetary policy, not set by individual commercial banks.
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To regulate the money supply: Regulating the money supply is a function of the central bank to control inflation and stabilize the currency.